I also think mutual obligation is an utterly pointless exercise in time-wasting that allows Centrelink bureaucrats to behave like martinets, as this post ably outlines.
‘Mutual obligation’ (’work for the dole’ and such like) is intended to avoid the problem of moral hazard: people in receipt of government benefits are made to do something in return, thus reducing the attraction of ’sit-down’ money. This ’something’ is usually pointless and demeaning and, as Jason points out, when combined with other (libertarian) arguments for economic reform (like the abolition of the minimum wage, for example) serves only to make us all look like Victorian-era bastards
It really always was about punishing dole recipients to make angry taxpayers feel better. The work being done never really made up for the costs of administering the scheme in any significant way, and didn't really assist anyone apart from the lucky non-government recipients of the free labour - but that wasn't what appealed to the voters, was it. It wasn't about the positives for us; it was about the negatives for them. If we were going to keep the unemployed alive, we wanted them to suffer in return. It was an entirely negative sentiment. It was the consolation of making us feel better by making someone else feel worse.
Sometimes human nature sucks, it really does.
