A job agency that came under fire at the disability royal commission for a questionable barista course is among several providers stripped of contracts under a shake-up of Disability Employment Services (Des).
AimBig Employment is one of 52 for-profit and charity-run employment services providers that have lost market share in the $1bn-a-year program following a performance review.
The company was criticised at the royal commission in February, after the inquiry heard it claimed more than $1m in government payments for its “BusyBeans” barista program for people with disability. The program was said to have lacked basic equipment in one case, despite being also funded by a $300,000 government grant.
According to documents published by the government on Wednesday, AimBig will lose about 18% of the 106 Des job agency sites it has been running, making it the second-hardest hit provider. The changes are the result of this periodic review, not the royal commission.
The worst-hit job agency is AtWork, which will have 19% of its 123 sites closed. It has faced criticism from jobseekers during the rollout of the separate mainstream job services scheme, Workforce Australia.
Joblife Employment, Status Employment Services, About2Work, which lost all of its eight sites, and Matchworks were the others to lose the most in market share.
Other affected companies to lose a small number of sites included major players Max Employment, the Salvation Army Employment Plus and Sarina Russo.
The largest provider, APM, was not affected by the overhaul.
About 15,000 jobseekers will be referred to a new provider following the changes, which were first announced at the weekend by the social services minister, Amanda Rishworth, ahead of the government’s jobs summit.
The list of affected providers was published on Wednesday and includes eight small providers who have been stripped of all their Des sites.
Rishworth said about 6% of disability employment services were “just not up to scratch”.
“We don’t think people with a disability deserve that,” she told ABC Radio on Wednesday. “Now I will make the point that there are a lot of good providers that are doing a great job with people with a disability, but it’s not good enough for their reputation to be damaged by poor-quality services.”
Because the scheme relies on outsourced providers, most of the $1bn a year allocated in the federal budget to the program is paid to for-profit and charity-run job agencies.
They receive service fees for each jobseeker on their books and “outcome” payments for placing people into employment or education.
Guardian Australia has reported extensively on how the complex, privatised job services model – and the accompanying mutual obligations that underpin the system – can see jobseekers forced through tick-a-box activities, while major providers can profit even when individuals find their own jobs.
A secret report commissioned by the former Coalition government and revealed by Guardian Australia showed the cost of the Des scheme had blown out significantly. This had padded the bottom line of providers but the quality of service was poor, the report said.
The “reallocation” of the business share of each Des job agency happens periodically and is based on a series of indicators, known as “star ratings”.
Both the employment services industry and welfare advocates have previously criticised the “star ratings” model, with some experts and former consultants saying the ratings can incentivise perverse outcomes, such as funnelling jobseekers into unnecessary education courses.
The Des scheme is currently under review by the government, as the contracts are set to conclude next year.
