The federal government has launched an investigation into 14 employment agencies suspected of rorting its multi-billion-dollar job assistance scheme, as evidence mounts of the long-running program being routinely abused.
The inquiry is the first stage of an industry-wide review into the false claiming of fees by providers contracted by Job Services Australia, a federal initiative.
The review is being overseen by Robert Butterworth, a former senior public servant appointed by the Employment Participation Minister, Kate Ellis. His contract will run until early May.
The audit was prompted by a Fairfax investigation which revealed the Catholic Church's employment arm had systematically defrauded the scheme by falsely claiming it had found positions for jobseekers that they, in fact, had found for themselves.
Under the welfare-to-work program, hundreds of employment agencies are paid fees for providing assistance such as workplace training. The agencies can also pay taxpayer-funded wage subsidies to reluctant employers to help sweeten the deal.
Those agencies which find, or ''broker'', more jobs are rewarded with higher fees and a higher rating.
Higher ratings make future government contracts more likely.
But in what has become a highly-competitive industry, there is so much pressure on these agencies to survive, many lodge false claims to boost revenues and maintain their ratings.
A spokeswoman for Ms Ellis said the investigation will rely upon a ''detailed review of financial and other documentation''.
''Based on findings from this first stage, Mr Butterworth will review the process, determine whether more or less providers should be included for the second stage and what information will be required to ensure the process is thorough,'' she said.
The review is also expected to inform whether structural changes are needed to Job Services Australia and its contract with the private sector.
Industry figures have confirmed that abuse of the system is rife, especially in the form of false claims for fees and the improper awarding of wage subsidies from taxpayer funds. The government has not named the 14 providers now under investigation.
The spokeswoman said the ''findings and policy changes as a result of Mr Butterworth's work will be publicly communicated, subject to legal requirements''.
A copy of the letter sent to the 14 organisations - which was provided by Ms Ellis' office - warns that recovery of funds and ''further sanctions'' may result from the department's inquiries.
Official correspondence sent to the entire industry noted that some providers had already ''identified potential errors'' and ''reviewed their internal working practices''.
Jobs Australia chief executive officer David Thompson said the government should minimise incremental payments for organising training or interviews, and boost ''outcome'' fees when jobseekers genuinely found meaningful employment.
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