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Contemporary disability employment policy in Australia: how can it best support transitions from welfare to work?


Since the re-election of the Howard government in 2004, welfare reform has been back on the government's agenda as a high priority. Although the notion of 'workforce participation' has long driven government's employment policy, the participation rate of people with a disability was of particular interest in the government's 2005 reforms. The transfer of Open Employment Services for people with a disability from the Department of Family and Community Services (FACS) to the 'Workforce Participation' portfolio within the Department of Employment and Workplace Relations (DEWR) was among the first of the Prime Minister's announcements following his re-election. This move signals significant changes for the disability employment sector and for disability employment policy. Against the background of disability employment policy in Australia, this article examines current government policy initiatives and their possible implications and the interface between disability employment services and the Job Network. It concludes on the possible application of Transitional Labour Market policies as a means of increasing workforce participation rates for jobseekers with a disability and what this would require from government policy.


One of several messages which emerged from the Coalition's re-election in 2004 was that welfare reform was back on the Government's agenda as a high priority. The notion of 'workforce participation' has long driven government's employment policy, with the participation rate of people with a disability of particular interest at the present time.

While over 16 per cent of working-age Australians has a disability (ANTA 2000), only a small percentage of this group is actually working at any given time. During 2002-03, only 6 per cent of the total number of people in receipt of the Disability Support Pension (DSP) participated in an employment-related program (ACOSS 2005). Such under-representation in the labour market can lead to the 'social exclusion' referred to

by Schmid: particularly the notion of long-term unemployed individuals 'discouragingly withdrawing from the labour market' (Schmid 1998, p. 14).
 A major reason for the low employment rate among disability
 pensioners in Australia is that they are less likely to receive
 help to get a job, or rehabilitation or training. The Australian
 Government only spends about two thirds of the OECD average
 expenditure on these services, in proportion to the size of our
 economy (ACOSS 2005, p. 8).

This article begins with a brief history of disability employment policy in Australia. It then outlines current government initiatives targeted at increasing the representation of people with a disability in the labour market. It focuses specifically on the role and projected future of Open Employment Services (those services assisting job seekers to gain and maintain employment in the open employment market or to become self-employed), given the government's current reform agenda for these programs. The interface between traditional disability employment services and the Job Network is also examined. The article concludes on the possible application of Transitional Labour Market policies as a means of increasing workforce participation rates for jobseekers with a disability.

History of Disability Employment Policy in Australia

Vocational training for people with disabilities in Australia was introduced in 1919 following World War Two, with the Commonwealth's 'Repatriation Commission' that targeted ex-servicemen with disabilities. This work was expanded following World War II with the establishment of the Commonwealth Rehabilitation Service (CRS) in 1948, which provided vocational rehabilitation to ex-servicemen and others. The CRS ensured for the Commonwealth a central and continuing role in vocational education, training and employment programs for people with disabilities (Disability Services Program 1995).

During the 1950s, 'Sheltered Workshops' were established by private and often voluntary organisations. The objective here was to provide 'gainful employment' for people unable to compete in the 'open labour market' (Disability Services Program 1995). Over time, public pressure saw the Federal Government also assume an increased responsibility for funding these services.

In 1985, the report of the Handicapped Programs Review, New Directions, outlined a range of proposals for the improvement of services for people with disability. This review led to the enactment of the Disability Services Act in 1986 which provides a legislative and funding framework for a range of disability services, most significantly employment assistance. CRS Australia, Business Services (formerly referred to as 'sheltered workshops') and Open Employment Services are all funded under this Act to deliver employment services to jobseekers with disability. The Act also established a set of guiding principles and objectives for service provision, which are underpinned by social justice principles and remain in place today (Disability Services Program 1995).

How is Disability Employment Assistance Currently Delivered?

In recent years, access to different types of disability employment assistance has been facilitated by an assessment of support needs by Centrelink officers. Referral to a range of vocational options is then possible, with the decision to access assistance left up to the individual, as, until July 2006, there is no compulsory participation requirement. (1)

From July 2006, the primary pathway to disability employment assistance will be the 'Job Capacity Assessment' or JCA. This 2005/06 Federal Budget is intended to serve the dual purpose of: (a) streaming jobseekers with disability to the employment assistance that best meets their needs, and (b) informing Centrelink's income support decisions. (2)

Open Employment Services offer intensive and ongoing support to secure and maintain work in the 'open' labour market, while Commonwealth Rehabilitation Service (CRS) Australia provides short-term vocational rehabilitation programs. Job Network providers assist jobseekers who have relatively low or no ongoing support needs attributable to their disability and Business Services provide work options of a more segregated nature.

In the 2002-03 financial year, approximately 40,000 people with disability were assisted Open Employment Services nationally. Another 35,892 were registered with CRS Australia, whilst 6,500 people with disability accessed Job Network Intensive Assistance (FACS 2003). Open Employment Services were recently renamed the 'Disability Employment Network (DEN)) and were previously known as 'Competitive Employment Placement and Training' services and Disability Employment Assistance. They are referred to as 'Supported Employment' in the US, Europe and New Zealand.

The Disability Support Pension is the main source of income for 47 per cent of people receiving assistance from an Open Employment Service and 2 per cent of people registered with the Job Network (FACS 2004, p. 77).

ACE represents well over 80 per cent of Australia's 220 Open Employment organisations. Most of these are small to medium-sized not-for-profit organisations that have been in operation for between 10 and 20 years. Many Open Employment Services also deliver Job Network, the Personal Support Program and other labour market programs, in addition to school to work transition and other prevocational activities. The Australian government invested just over 300 million dollars in Open Employment assistance during 2002/03, with an additional $189.5 million over four years allocated to the sector in the 2005-06 Federal Budget (DEWR 2005).

Some services specialise in assisting people with particular types of disability, but most services work with all types of disability; including people with learning and intellectual disability, physical disability, sensory disability, psychiatric conditions, neurological impairment, attention deficit disorder, autism and acquired brain injury. Over many years, services have developed the capacity to assist such a diversity of needs by maintaining their knowledge of appropriate technology and equipment, workplace modifications and effective training and support techniques. The forging of strong partnerships with schools, carers, treating health professionals and, most importantly, employers, has also been a critical part of facilitating employment pathways.

The majority of people assisted by Open Employment Services achieve permanent employment (approximately 85 per cent of those placed into work). Over one-third are employed on a full-time basis and 66.5 per cent work over 16 hours per week (FACS 2004).

The average expenditure per participant in Open Employment Services during 2001-02 was $3,038 compared to $5,925 for Business Services. (3) In the same year the estimated cost per participant for CRS was $4,398 (Institute for Research into International Competitiveness 2003). The Job Network's Intensive Assistance program (which provides assistance to people who are long-term unemployed, including people with a relatively low impact disability who do not require ongoing support) was estimated to cost $2,700 per participant (ACE 2005 citing DEWR 2002).

Open Employment Services provide much more intensive and specialist support to people with a disability and, as a result, they tend to achieve much higher outcomes than generic services; particularly for people with high or ongoing support needs. However, a comprehensive cost-benefit analysis of Open Employment Services is needed to fully demonstrate the economic value of these services, which may allow for comparisons with other programs. The Association of Competitive Employment is working to address this research need and has called on the Australian Government to commission a comprehensive and independent study.

Australian Disability Employment Policy in Transition

Plans for a review of the disability employment sector were first flagged in the Labor Party's 'Working Nation' strategy of 1994 (Disability Services Program 1995), with the Coalition Government's 1996 Federal Budget further developing the proposal. The full extent of the current government's reform agenda became much clearer with the release of a number of documents, including the Final Report of the Reference Group on Welfare Reform, or McClure Report. Although a major review of disability employment services was well underway prior to the release of this report, the review is included in, and strongly connected to, a number of recommendations made by McClure's working party relating to people with disabilities (Department of Family and Community Services (FACS) July 2000).

Following the 2004 Federal Election, responsibility for Open Employment Services was transferred from the Department of Family and Community Services (FACS) to the Department of Employment and Workplace Relations (DEWR), the department responsible for the Job Network. This move is considered one of the most significant changes to disability employment policy for many years.

Whilst the Job Network has always been able to register jobseekers with disability, its interest in doing so has increased significantly in recent years. A number of strategies have been designed to improve the Job Network's capacity to assist jobseekers with disability. The most significant of these was the Job Network Disability Support Pension Pilot. In early 2004, DEWR conducted the Pilot in order to explore ways of increasing the number of DSP recipients using the Job Network's disability specialists (there are 12 providers nationally covering 37 sites) (DEWR 2004).

Despite their misgivings of the Pilot, Open Employment Services welcomed the increased attention it provided to long-standing employment barriers for DSP recipients, along with the finding that the majority of people with a disability want to work, but may not be aware of what assistance is available to them. As stated in the Pilot's Interim Evaluation Report job seekers with disability face formidable barriers to participation:

The evaluation has gathered evidence of significant disincentives and widespread ignorance inhibiting DSP recipients' take up of work opportunities:

* A major disincentive is the fear of losing the pension and/or associated concessions, and concerns about their ability to either retain the DSP as a safety net or re-establish eligibility for DSP

* There is little understanding of the work incentives available in the income support system such as income tests, the availability of concessions and pension suspension arrangements

* Under the current pension suspension arrangements, there are insufficient guarantees of a return to pension if a recipient leaves work for reasons other than their disability

* Many job seekers have had negative experiences with employers. Perceptions of discrimination by employers against people with disabilities discourage DSP recipients from testing their work capacity. Pilot providers also report that employer ignorance of disability issues and discrimination constitute major barriers to placing people with disabilities (DEWR 2004, p. 3).

The 2005-06 Federal Budget provided for further transformation of employment pathways for people with disabilities. The valuable role played by Open Employment Services nationally was recognised, with funding for 21,000 new places made available to Open Employment Services over the next four years. This measure effectively renders aspects of the program 'demand driven' like the Job Network. It is anticipated that targeted uncapping will provide increased access to places for many jobseekers and address long standing unmet need for employment assistance.

The 'catch' with the new places is that only 4,000 of them will be made available to 'traditional' (voluntary) jobseekers, generally in receipt of the DSP. From 1 July 2006, approximately 17,000 places are earmarked for those people with disability who are assessed by the Comprehensive Work Capacity Assessment process as having the capacity to work more than 15 hours per week without long-term ongoing support. These jobseekers will now be required to demonstrate that they are actively seeking work in order to become eligible for income support as they will fall under mutual obligation measures given the passing of the contentious and previously stalled Disability Support Pension Bill in the Senate in December 2005.

Several other OECD countries have compulsory participation requirements for jobseekers with disability including; Austria, Denmark, Spain, and Switzerland. Participation remains voluntary in the UK, USA, France, Netherlands, Norway, Poland and Portugal (OECD 2003).

Australia's Open Employment Services have generally not been required to work with 'involuntary' jobseekers. This move is likely to have major ramifications for the sector, which was built on the principles of voluntary participation and choice, as outlined in the Disability Service Standards. This move, coupled with the recent introduction of rigorous competitive tendering for Open Employment Services, will see the sector undergo significant transformation in the coming years.

Beyond 'Welfare to Work'

While the 2005-06 Federal Budget did contain a number of proactive measures, a disappointing aspect of the package was that a new 'Employer Demand' strategy (aimed at increasing employment opportunities for people with disability by working directly with employers) was not linked to a broader range of related policies.

The question of 'what is reasonable' for a jobseeker with disability to do in exchange for income support cannot be separated from what is reasonable for a jobseeker to expect in return, particularly when the links between disability and socio-economic disadvantage are so clear. Aside from lower levels of employment:

* People with disability have lower levels of tertiary qualification, post-school and secondary education completion

* A high proportion of people with disability do not have basic literacy and numeracy skills

* People with disability often face increased costs associated with everyday living and participation in work or study

* The compounding impact of socio-economic disadvantage can affect health, nutrition, environment and social networks which in turn can reduce individual capacity for work, study or participation in the community (ACE 2005).

While the work done to date by Open Employment Services and others is highly commendable, much more can be done to further enhance workforce participation rates of people with disability. To this end, ACE is calling for the development of a National Disability Employment Strategy, which would provide for greater investment in and better coordination of school to work, welfare to work, education, training and employer awareness initiatives.

Work recently completed by the Human Rights and Equal Opportunity Commission (HREOC) through its National Inquiry into Employment and Disability sought to piece together the complex disability employment jigsaw. Through the Inquiry it also became clear that the building blocks for a really robust system are already in place, however better co-ordination is urgently required. (4)

Emerging Tensions

As Open Employment Services adjust to life in the 'new home' of DEWR, additional implications of being transferred into one of the Government's largest and most influential departments begin to emerge.

Service viability in an increasingly competitive environment, where Open Employment Services may ultimately compete with the Job Network and each other for service contracts, is of great concern to providers at the present time. The Open Employment Services sector is currently preparing for major changes and a possible rationalisation of services, with plans for new alliances, mergers and consortiums underway across the country.

The future role and application of the Disability Service Standards is unclear at this juncture. Consumer groups have expressed concern at the potential loss of an explicit framework for ensuring jobseekers with disability secure quality employment assistance. Providers have indicated that maintaining a commitment to the Standards under current arrangements requires significant expenditure, possibly rendering Open Employment Services 'uncompetitive' when Job Network members are not required to meet them in the same way.

Maintaining access for people with very high support needs is also of concern. With the push to design employment services that have a 'flow through' of clients (and the subsequent impact this has on cash flow and service viability), the provision of long-term support may no longer be an attractive option for some providers. It is critical that soon-to-be developed industry performance measures are constructed in a way which would guard against any unintended consequences of service viability pressures.

Strategies to Strengthen Transitions to Employment

Transitional labour markets offer a framework which could greatly enhance representation of people with a disability in the labour market. As suggested in the literature, amongst other things, good transitions should:

* Empower individuals by building or maintaining their employment capacity

* Provide active support instead of passive payments

* Establish a balance between central regulation and individual or local flexibility

* Stimulate networks and cooperation (Ziguras et al. 2004, p. 3)

To build the employment capacity of people with a disability, much work is required, given the very low representation rates in vocational employment and training programs for this group. While 11 per cent of the broader community access some form of vocational employment and training activity, this applies to only 2.4 per cent of people with a disability. And while 16.7 per cent of the broader community were engaged in New Apprenticeships, a mere 2 per cent of workers with a disability access this scheme (ANTA 2000).

When discussing 'active support', this should always be considered a 'two way street'. The whole thrust of the Government's current mutual obligation philosophy creates responsibilities for all stakeholders in the employment assistance arena: government, business and community must all contribute to and share the costs of the wider goal of creating an inclusive society and economy. A key focus should also be working towards 'making transitions pay' (a key element of the McClure Report in to Welfare Reform) (FACS 2000).

The transfer of Australia's Open Employment Services into the nation's department of employment should provide for better coordination of all employment-related services and networks. Ideally this would also prove beneficial to jobseekers with a disability. Possible tensions emerging from new policy directions should be carefully assessed by Government, with the aim of maintaining and enhancing current levels of service diversity and effective local solutions that are not compromised by administrative pressures.

Finally, the CEO of the newly formed Australian Federation of Disability Organisations, Maryanne Diamond, has stated that 'no talk about the experiences of people with disability in employment would be complete without mentioning two things: first, the cumulative impact of direct and indirect discrimination and, second, discrimination in the workforce' (Diamond 2005).

Discrimination in employment has not been significantly reduced nor greater opportunities for employment created, despite the Disability Discrimination Act being in place for over ten years (Productivity Commission 2004). Disability discrimination and disadvantage involve an interrelated set of barriers (related to transport and mobility, public infrastructure, education, community attitudes and employment), which require a whole-of-government approach if an inclusive society that values equity, accessibility and full participation is to be built in this country (ACE 2004).

Ways this could be achieved are the creation of a 'positive duty' for employers to take reasonable steps to identify and to work towards removal of barriers to the employment of workers with disabilities. 'Reasonable' affirmative action could include consideration of job redesign or job creation, the use of the Supported Wage System for workers whose productive capacity is an issue and use of the Workplace Modification Scheme in situations where worker productivity could be increased by the provision of aids or equipment (ACE 2004).

In conclusion, transitions from welfare to work for jobseekers with a disability require a range of interventions, most notably;

* Addressing the high levels of unmet need for employment assistance and on-going support

* Increasing the capacity of existing services and exploring new and complementary options (for example, 'Social Firms' which provide supportive workplaces for people with and without a disability)

* Collaboration with Australian Government and industry to address discrimination and create new employment opportunities

* Easier access to funding for workplace modifications and other employer incentives

* Building incentives and safety nets into the system to encourage jobseekers' participation and to demonstrate that 'making the transition pays'.

There is no doubt that a number of challenges will arise in responding to aspects of the Government's current welfare and employment policies. ACE is working closely with its members, government and other stakeholders to ensure that these measures are implemented in a manner that maximises meaningful employment opportunities and pathways for jobseekers with a disability.


Association of Competitive Employment (ACE) (2004), Submission to Review of the Disability Discrimination Act 1992 Draft Report, Association of Competitive Employment, Melbourne

Association of Competitive Employment (ACE) (2005), Disability Employment Assistance Fact Sheet (in publication Forthcoming

Australian Council of Social Service (ACOSS) (August 2000), Is the Job Network Working? ACOSS analysis of the first stage of the official evaluation, ACOSS Paper 108. ACOSS, Redfern, NSW

Australian Council of Social Service (ACOSS) (2005), Ten Myths and Facts About The Disability Support Pension (DSP), ACOSS Paper 362. ACOSS, Redfern, NSW

Australian National Training Authority (ANTA) (2000), Bridging Pathways, National Strategy, Available at: http// [accessed 12 December 2004].

Department of Employment and Workplace Relations (DEWR) (2002), Job Network Evaluation Part 3: Effectiveness, Evaluation and Programme Performance Branch Labour Market Policy Group, Department of Employment and Workplace Relations EPPB Report 1/2002, Department of Employment and Workplace Relations, Canberra.

Department of Employment and Workplace Relations (DEWR) (2004), Interim Evaluation Report of the Job Network Disability Support Pension (DSP) Pilot.

Available at: htt:// DSP_Pilot_Interim_Evaluation.asp [accessed 30 October 2004].

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Department of Family and Community Services (FACS) (July 2000), Participation Support for a More Equitable Society--Final Report of the Reference Group on Welfare Reform, Department of Family and Community Services, Canberra.

Department of Family and Community Services (FACS) (2002), Disability Services Census, Department of Family and Community Services, Canberra.

Department of Family and Community Services (FACS) (2003), Improving Employment Opportunities for People with a Disability, Report of the Review of the Employer Incentives Strategy, Department of Family and Community Services, Canberra.

Department of Family and Community Services (FACS) (2004), Budget Statements. Available at: aboutfacs/budget/ budget2004-bs.htm#budget [accessed 28 February 2005].

Diamond, M. (2005), Speech to the People with Disability: Participation and Payments Forum, 3 February 2005, Melbourne, by Maryanne Diamond, CEO, Australian Federation of Disability Organisations. Available at: 20and%20Payments%20Forum/docs/The_View_from_the_Ground--final.html [accesssed 22 February 2005].

Disability Services Program, Commonwealth Department of Human Services and Health (1995), Performance Based Funding: a Framework for Funding Disability Employment Services (draft paper). Department of Human Services and Health, Canberra.

Institute for Research into International Competitiveness (2003), Cost Benefit Analysis of Rehabilitation Services Provided by CRS Australia conducted by the Curtin University School of Business for CRS Australia, Australian Government Department of Health and Ageing, Canberra.

National Disability Administrators (2003), "To Take Part' Economic and Social Participation for Australians with High Support Needs, Final Project Summary Report, Under Publications--NDA Publications, Canberra.

Organisation for Economic Co-operation and Development (OECD) (2003), Transforming Disability into Ability: Policies to Promote Work and Income Security for Disabled People, OECD, Paris.

Productivity Commission (2004), Productivity Commission's inquiry into the Disability Discrimination Act 1992. Available at: [accessed 12 December 2004].

Schmid, G. (1998), Transitional Labour Markets: A New European Employment Strategy Discussion Paper FS 1 98--206, Social Science Research Centre Berlin. Available at: Schmid_Refl.pdf [accessed 10.01.2005].

Steering Committee for the Review of Government Service Provision (2004), Report on Government Services 2004, Vol. 2 Part F (Community Services) Attachments--Table A.25. Available at: rogs/2004/index.html [accessed 12 December 2004]. [accessed 12 December 2004].

Ziguras, S., Considine, M., Hancock, L. and Howe, B. (2004), From Risk to Opportunity: Labour Markets in Transition, Background Paper. Available at: [accessed 30 January 2005].


(1) The 2005 Federal Budget outlined plans to introduce work requirements for certain people with disabilities, namely those with a assessed capacity to work 15 or more hours per week ( This policy is effective as of July 2006.

(2) For further information on the CWCA, please visit

(3) Steering Committee for the Review of Government Service Provision (2004) Attachments to Part F Table A.25.

(4) Visit for further information

Lucy Macali, Association of Competitive Employment, Australia
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Author:Macali, Lucy
Publication:Australian Bulletin of Labour
Geographic Code:8AUST
Date:Sep 1, 2006
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