The employment services sector in Australia is at a critical juncture. The third contract round of the Job Network coincides with a commitment by the new Federal Government to the principles of sound market design. These principles include the alignment of incentives between providers, users of services and taxpayers; generation of new sources of investment; removal of barriers to entry; and transparent information on service quality.

An important goal of the redesign of this market is to stimulate greater innovation amongst providers. This background paper offers an overview of social innovation and three case studies of successful social innovation projects. The paper is intended to illustrate the principles of social innovation for organisations which may be considering an application to the Innovation Fund, the Federal Government’s primary policy tool to stimulate innovation in employment services.