Punishment Pays: The reason why the Government won’t bin Mutual Obligations

As it stands, this Government has chosen to drag the public into yet another unlawful welfare scandal, because it is unwilling to challenge private business, and Robodebt-era systems and ideologies of punishment.

“Over the past few years, mounting evidence of illegality has been met with secrecy, internal fallout, and an escalating effort to defend the system at all costs. But just how far are the Minister and Department prepared to go to keep the punitive Mutual Obligations regime alive?

On December 16, Employment Minister Amanda Rishworth announced that the Secretary of her Department was being let go, just a week after the second damning Ombudsman report into the Targeted Compliance Framework (TCF) –the unlawful system that forces welfare recipients to complete ‘mutual obligation’ activities and appointments in exchange for their welfare payment.

Despite direct questioning from journalists, Minister Rishworth has given no explanation for the Secretary’s departure, triggering speculation that it was the result of differing opinions about the ongoing viability of “mutual” obligations in the wake of the Ombudsman’s investigations.

The Ombudsman’s latest investigation into the unlawful Targeted Compliance Framework is deeply significant: for the first time, the Government’s administration of outsourced job providers is firmly in the crosshairs of a major public institution.

Prior to this booting from the Ombudsman, the Government has had multiple opportunities to turn the system off, and has refused each time. A Labor-led parliamentary inquiry conducted from 2022-3, received dozens of submissions from welfare recipients with evidence of unlawful punishments. The government refused to look into any of them.

An independent review, which the Department farmed out to Deloitte in late 2024, exposed a litany of tech failures and couldn’t provide assurance that the TCF is operating in line with the law. Yet, this only prompted the Department to defend the system more robustly. Departmental briefings, I unearthed under FOI, advised Minister Rishworth in July 2025, to come out swinging in defence of “the principles of mutual obligations”, as part of a media strategy to overcome ongoing PR damage. Here, public exposure has become an existential threat. By August 2025, the Minister’s Mutual Obligations redemption tour was derailed, as her Department now had to defend itself against new revelations that Deloitte’s review was littered with AI errors and “hallucinations”.

For years, the outsourced employment services industry has been granted extraordinary powers under the TCF to surveil, exploit, and punish welfare recipients, without proper oversight, or scrutiny from any kind of watchdog – until now.

Ultimately, the Ombudsman “could not be assured” that the department “maintains effective oversight of decisions made by providers.” Further, it found that these companies are using the TCF to inflict “high percentages” of incorrect decisions and “potentially catastrophic penalties”, with minimal consequences.

Successive governments have easily exploited the fact that welfare recipients – often living in extreme poverty – are isolated from advocacy networks and lack effective political or legal representation to fight incorrect, unlawful decisions. Welfare recipients are also hampered by what the Ombudsman calls “vague and incoherent” information from the department, and cannot overturn the serious, escalating punishments designed into the core of programs.

The Ombudsman’s interventions are crucial – no longer can the welfare bureaucracy cloak and obfuscate its failures and unlawful punishments. With enough light shone on this system, the poor get a fighting chance to pursue legal action and overturn wrongful decisions.

Because, the grim reality is that welfare recipients can’t rely on the Government to pause, or stop these unlawful decisions made against them in the first place.

Throughout this scandal, civil society groups (who were consulted by the Department on the crisis) told the Government to abolish the Targeted Compliance Framework, and immediately suspend payment suspensions and punishments issued by providers.

The Government has refused.

Instead, recent MYFEO statements have revealed that the government is bracing itself for a wave of compensation claims for TCF victims, listing almost half a decade of potentially unlawful decisions as a new ‘unquantifiable’ Commonwealth liability.

Despite the severe legal risk for its own department, the government has kept the TCF firing off payment suspension threats at an astonishing rate of five per minute.

The Department refused to turn off compulsory activities and payment suspensions during last month’s record-breaking heatwaves, even though welfare recipients told them it was putting their health at risk.

In last October’s estimates, Senator Jess Walsh claimed payment suspensions are an “important part” of the system because “at the end of the day we want people to get off payments and find a job.”

The main purpose of the TCF – as with most welfare programs in the neoliberal era – is to identify, punish, and purge those the state believes are unworthy of support.

This harkens back to the Coalition’s 2018 launch of the TCF as a central policy tool for “a New Era of Welfare,”  to intensify punishments, remove the administrative ‘burden’ of government oversight, and further re-frame welfare recipients as job-avoidant frauds.

Even though the system’s illegality has finally been exposed, the political commitment to bludger-bashing keeps it operating. As we saw in the Robodebt scandal, this ideological thirst for punishment overrides any concern with trivial matters like common sense, evidence, or the law.

Alongside this ideological dedication, the Government also has to prioritise the profits of the employment services industry, which uses the unlawful TCF to punish welfare recipients.

Under FOI, I’ve also unearthed ministerial briefings from the department advising the Government not to turn off payment suspensions, because this “…would remove a key element of the TCF, which is necessary to encourage engagement with employment services.”

The briefings go on to say that removing “compliance consequences dramatically reduces engagement with requirements” and has “significant implications on providers…both in terms of payments – viability – and interactions with the performance framework.”

Essentially, the department is worried that, if they turn off payment suspensions, participants won’t engage with so-called job providers, and the whole multi-billion dollar government-funded system will collapse.

These are the disturbing consequences of building an employment service around punishment; rather than as a useful service that anyone wants to voluntarily engage with.

The thin veneer of training, skills development and employability, meant to gloss over this system of enforced compliance, has completely cracked. Even the bureaucrats now privately admit that if they remove punishment from the system, there will simply be nothing left. The emperor has no clothes.

The pathway out of this mess for a government that preached “nobody left behind” is frustratingly simple. And no, it needn’t have involved sacking the Secretary.

The Labor Government’s decision to abolish the compulsory program for parents in 2023 has already proven how easy and sensible it is to remove forced activities and penalties from the employment services system.

Here, Minister Gallagher said “we don’t want people living in fear that they’re going to have their financial supports taken away.” And she lauded the idea of “moving to a program that we can co-design with stakeholders to achieve the same outcomes but without taking money from people who desperately need it.”

A real employment services system can be similarly rebuilt, without any punishment and compulsion, and in partnership with welfare recipients. That’s a sensible political choice which would help hundreds of thousands of people and – contrary to most recent examples of welfare reform – never run afoul of the law.

Until then, the Government cannot claim to be running an employment service in any meaningful sense. Instead, for the foreseeable future, its ramshackle Department will scramble to cover legal messes, preserve industry profits, and pretend that punishment is policy.

Jeremy Poxon is a welfare rights advocate with the Antipoverty Centre.