The decades-long full privatisation of Australia’s employment services system has failed, according to a parliamentary review ordered by the Albanese government that has urged Labor to re-establish a commonwealth job agency and overhaul the mutual obligations regime.

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The decades-long full privatisation of Australia’s employment services system has failed, according to a parliamentary review ordered by the Albanese government that has urged Labor to re-establish a commonwealth job agency and overhaul the mutual obligations regime.

The inquiry, chaired by Labor MP Julian Hill and established by the employment minister, Tony Burke, declared the system was frequently ineffective but was still set to cost over $9.5bn over the next four years.

The inquiry also recommended a watchdog responsible for regulating “workforce standards and professional development; research, continuous learning and improvement activities”, advising on funding issues and handling complaints.

The committee recommended the “broadening and tailoring” of mutual obligations, including developing individual job plans for jobseekers, returning the power to suspend payments to a public servant at Services Australia.

“The Workforce Australia inquiry has shown again that ‘mutual’ obligations are being incorrectly applied and causing mass harm to those of us who are battling to survive on half the poverty line,” Coonan said.

The Australian Council of Social Service acting chief executive, Edwina MacDonald, urged the government to implement reforms that would shift it from a “system that punishes people towards one that opens up real employment opportunities”.

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