Report Points to Six Areas of Competition Reform for Human Services

Greater competition, contestability and informed user choice could improve outcomes in many, but not all, Australia human services, according to a preliminary report by the Productivity Commission.

The commission’s preliminary findings point to six priority areas where competition models could improve outcomes for people who use human services, and the community as a whole.

The report said that reform could offer the greatest improvements for people who use social housing, public hospitals, specialist palliative care, public dental services, services in remote Indigenous communities, and grant-based family and community services.

“Well-designed reform, underpinned by strong government stewardship, could improve the quality of services, increase access to services, and help people have a greater say over the services they use and who provides them,” the report said.

The purpose of the PC preliminary report is to obtain public feedback on the commission’s findings before the release of its study report in November 2016.

Set up in June 2016, the inquiry follows the Harper Competition Policy Review recommendation that the human services sector be assessed to see where there would be opportunity to apply competition principles.

According to the Terms of Reference for the inquiry: “Australia’s human services sector is facing significant challenges, including increasing demand for services due to the ageing population, the effect of technology and cost increases associated with new and more complex service provision demands.”

The report’s preliminary findings said competition between service providers can drive innovation and create incentives for providers to be more responsive to the needs and preferences of users, and creating contestable arrangements amongst providers can achieve many of the benefits of effective competition.

However the report said for some services, and in some settings, direct government provision of services would be the best way to improve the wellbeing of individuals and families.

“Reform in the areas we have identified has the potential to improve the lives of users and the welfare of the whole community,” productivity commissioner Stephen King said.

“The services we have identified are all different, and one policy response will not fit all. We will be taking a case by case approach to unlocking the potential for reform.”  

The report said that change must come with strong and effective stewardship from governments and acknowledged that this role had not always been the case.

“Government stewardship is critical. This includes ensuring human services meet standards of quality, suitability and accessibility, giving people the support they need to make choices, ensuring that appropriate consumer safeguards are in place, and encouraging and adopting ongoing improvements to service provision,” the report said.

It said the introduction of greater competition, contestability and user choice may not always be the best approach to reform.

“One size does not fit all and redesigning the provision of human services needs to account for a range of features, including: the rationale for government involvement; the outcomes the services are intended to achieve; the nature of the services and the dynamics of the markets in which the services are provided; the characteristics and capabilities of users; and the diversity in purpose, size, scale and scope of providers,” the report said.  

“Not all of these features are clear cut or measurable, and all change over time. Further, reforms may raise or lower government expenditure on the provision of human services and different design options will have different fiscal implications for government.”

Community Council for Australia CEO David Crosbie said the PC preliminary findings offered a very useful perspective on the capacity to improve services by giving greater choice to consumers.  

“The international experience clearly demonstrates better services with increased public accountability in some areas of service delivery. In many of our systems – including most of our health care services – Australia lacks any real transparency or accountability,” Crosbie said.

“Australian GPs, hospitals and many medical specialists run what could best be termed stand and deliver services with no public accountability for outcomes or the quality of services.  

“CCA will be working with our members to develop a considered response to the first set of findings from the Productivity Commission in the Review into Human Services.”

Organisations and individuals are invited to make written submissions by Thursday 27 October 2016. The final report will be released in November 2016.