Major changes to the organization of welfare programmes indicate the emergence of a new welfare state (NWS) model which claims to put an end to the traditional “one size fits all” ideal of universality and standardization. The stated aim of such arrangements is to improve service for the client, reduce costs for the taxpayer and lift the performance of the system as a whole. The Labor government reform of the Australian employment assistance system between 1994 and 1996, and the Coalition’s first modifications of this scheme in 1997, provide a means to investigate the performance of a NWS system which uses private and public agencies to provide a basic, mandatory employment assistance service. Using verified data on the comparative performance of public, private and non-profit agencies and qualitative data from a study of Best Practice among high-performing agencies, the study shows that this system produces greater service variation than the previous universal service system.