I'm luke-warm on work for the dole. I think it has its place in the scheme of things, but is certainly no magic pill to cure 'dole bludging'.
There was some research that between 1999 and 2004 after the scheme came out despite unemployment falling drastically (mostly due to economic boom), the number of people who had been on unemployment benefits for 5 or more years rose from 87,000 to 127,000. So its clear it does not help all the unemployed folks but it works for some. For some people, it is believed that work for the dole may actually hinder job seeking efforts.
On the flipside, work for the dole programs often received positive reviews from people who participated. Some of the long term unemployed people claimed it boosted self esteem and made them feel happier.
More recent studies have revealed that in terms of helping people find work, it's one of the worst initiatives ever, but overall has its place as part of a wider toolkit of unemployment assistance.