Why Kevin Rudd is SMILING in this world wide recession.

Comrade Rudd and Madame Rein
Australians would be smiling too if they were about to reap a $300million dollar wind fall due to the world wide recession and the policies of Comrade Rudd's Socialist Government.

UK deals windfall for Rein enterprise

Peter Wilson, Europe correspondent
The Australian
March 11, 2009

KEVIN Rudd's family finances are heading in a different direction from those of most people as the global recession helps to add as much as $300 million to the annual turnover of his wife Therese Rein's job-placement company in Britain.

Industry experts familiar with her main operating company predicted yesterday that its turnover would more than treble in the next three years from about pound stg. 60million ($130 million) to pound stg. 200million.

While most families and industries struggle with the recession, Ms Rein, who is estimated to be worth $60 million, is prospering because her firm is already winning new British government contracts and her chosen profession of helping the unemployed is one of the few businesses that continues to boom in bad economic times.

Ms Rein's decision to sell her Australian operations to avoid a conflict of interest after her husband was elected prime minister in 2007 has turned out to be beautifully timed because she concentrated on the British job market just as it was preparing for an explosion of private sector activity.

Her firm, WorkDirections UK, is believed to have doubled its turnover from the pound stg. 32 million it reported in June 2007, while its workforce has also doubled to more than 700.

That growth is mainly being driven by the British Government's injection of new market forces and private enterprise into the task of finding jobs for the unemployed, but the recession is giving her business a further boost.

The upturn in Ms Rein's fortunes comes as Opposition Leader Malcolm Turnbull stands by his claim that it is hypocritical of Mr Rudd to attack "neo-liberal" policies when his own family finances have benefited from the privatisation of government services.

Ms Rein's acumen and business success have been well documented, but the extent of her expansion in Britain is only now becoming clear.

"Selling up in Australia and turning most of her attention to here (in Britain) turned out to be the smartest thing she could possibly have done," one economic adviser to the British Government said yesterday.

A spokeswoman for Ms Rein's holding company, Ingeus, yesterday refused to comment on the firm's growth prospects, issuing a statement saying that "we are not in a position to speculate about our purchasers' response to current economic conditions (but we) will continue to respond to employment services tenders as they arise".

Labour now pays about pound stg. 1 billion a year to private firms and voluntary groups for job services but it is committed to giving them access to more of the pound stg. 36 billion that it spends on the unemployed each year.

The likelihood of a Conservative election victory next year suggests there will be an even bolder shift to the private sector, with the Tories promising to put many more job-search functions out to contract and to make heavy cuts at the Department for Work and Pensions, which has already lost 30,000 jobs under Labour.

With Britain suffering one of the deepest downturns in the developed world, the number of people on some form of jobless benefits is tipped to double to two million, prompting Gordon Brown's Government to increase the scale and pace of its shift to private-sector job placement.

One of the Government's flagship programs, the Flexible New Deal for the long-term jobless, has been expanded from 100,000 places to 300,000 and the upfront payments to job placement firms have been increased to help fund the start-up of what is essentially a new private industry.

Several experts in London said the next 18 months to two years would be difficult for the private providers as they struggled with their own structural changes and a shortage of job vacancies, but when the recession eventually eased the profits would roll in. When the economy finally began to create more jobs the job placement agencies would thrive because they would have large numbers of relatively skilled and work-ready people on their books.

Richard Johnson, a former executive at Ms Rein's firm in Britain who now heads one of her rivals, yesterday backed the prediction that she could triple her turnover in the next three years.

"If you do the numbers you do come up with a result like that and Therese has built a company that deserves that sort of success," said Mr Johnson, the managing director of welfare-to-work programs for Serco, one of the world's largest providers of privatised public services.

"WorkDirections has probably the best reputation in the country for quality and integrity. It pays its front-line staff more than other providers and something like 90 per cent of them have university degrees.

"That high-quality service is a point of difference in the market and it has been a very clever strategy because the trend now is all about basing payments on results and if you deliver better results you will be better rewarded."

The Government is offering 24 large five-year contracts to provide job services in different parts of Britain and WorkDirections is widely expected to win three or four contracts.

That would lift its turnover to perhaps pound stg. 105 million and similar results in the next two annual rounds of contracts would lift it to about pound stg. 200 million.

Professor Dan Finn, a welfare-to-work expert for the Centre for Economic and Social Inclusion who has studied the introduction of such schemes in Australia and the US, said the first few years of the new British contracts were likely to have generous government funding.

"If you look at cases like the Jobs Network in Australia they tend to spend a lot to make sure it gets up and running, and then they tighten up the funding," he said.

"That is when the number of providers competing for business falls away ... and the quality operations like WorkDirections are left standing."

Ms Rein's firm has also entered the French, German and Swedish job markets but the greatest rewards have been offered by the structural reforms in Britain. Labour has already brought single parents and the disabled into welfare-to-work programs and is now flirting with the more radical step of using the huge pot of money that is normally reserved for unemployment benefits to pay job-placement firms for reducing the benefits bill.