Wage subsidies are a discretionary financial incentive to encourage employers to hire eligible job seekers by contributing to the initial costs of hiring a new employee. Wage subsidies can help overcome employers’ reluctance to hire certain groups by compensating employers for real or perceived lower levels of productivity, can increase employment opportunities for disadvantaged job seekers, and lower the reliance on income support. Wage subsidies also contribute to the broader employment program objectives to promote stronger workforce participation and help job seekers move from welfare to work.
Wage subsidies in various forms have formed part of Australian Government employment programs since 1976. The current wage subsidies were introduced progressively, beginning with the introduction of the Restart wage subsidy in 2014–15, and the implementation of the Jobactive employment program in 2015–16.
Job seekers who have been unemployed for a long time generally experience greater difficulty finding subsequent work, as their paid work prospects decline. This audit is an opportunity to examine the effectiveness of the administration of wage subsidies, and the extent to which DESE monitored and evaluated if wage subsidies improved employment opportunities for employment program participants, by assisting job seekers into work and meeting employer needs. This audit also has the potential to inform any changes to wage subsidies that could be considered as part of DESE’s reforms to employment programs, currently in the development and piloting phase and due for implementation in July 2022.
The objective of the audit was to assess the effectiveness of the DESE’s arrangements in administering wage subsidies linked to employment programs.
To form a conclusion against the audit objective, the following criteria were applied:
- Are wage subsidies assessed, processed and paid in accordance with program requirements and contractual obligations?
- Is the application and use of wage subsidies effectively monitored, evaluated and reported to ensure policy objectives are being achieved?