Government’s Role in Creating ‘Shared Value’

The Australian community needs to work harder at improving the relationship between government, the Not for Profit sector and business to create shared value, says the Federal Minister for Social Inclusion, Mark Butler.

Australia has one of the best mainstream social support systems in the world. The development of our public education, universal health care and universal superannuation systems over recent decades are achievements of which we should all be proud. The National Disability Insurance Scheme will build on those strong foundations.

However it is still the case that our social support system is more fragmented than it should be. If you are one of the 640,000 Australians who experience multiple forms of disadvantage, navigating across multiple service systems can be a nightmare.

The traditional, “siloed” approach of government policy making doesn’t help, often stifling change and innovation. That is the inspiration behind the Australian Government’s social inclusion agenda, which is linked to our Not for Profit reform agenda.

One of the great hopes for change lies in the emergence of the Not for Profit as the dominant mode of social service delivery.

The Australian Not for Profit sector now comprises around 600,000 organisations, employing around one million Australians. In areas like disability and mental health they are increasingly replacing direct government service provision, as federal, state and local governments outsource service provision to improve outcomes and value for money.

It is not only the capacity of Not for Profits to provide services across portfolios and break down the silos which is attractive and has generated this change, but their ability to draw in the collective effort of the community in addressing social problems. Charities bring together business people, entrepreneurs, volunteers and resources behind a collective effort to pursue their social objective. In doing so, they draw businesses and the broader community into a conversation about their cause.

In collaborating with business and the broader community to provide services in areas like unemployment, homelessness, disability, mental health and aged care, these partnerships generate value for the charity, its supporters and indeed for the whole community.

Mark Kramer, senior fellow at Harvard's Kennedy School of Government and an originator of the “Creation of Shared Value” concept has written extensively about this phenomenon. According to Kramer, “shared value” is created when companies create “economic value in a way that also creates value for society by addressing its needs and challenges”. He argues that ‘shared value’ must be underpinned by effective collaboration between the Not for Profit sector and government. Recognising and capitalising on the connections between social and economic progress, he says, has the power to unleash the next wave of global economic growth.

We can point to many recent successful collaborations between the Not for Profit sector and corporations in Australia. The Gillard Government’s Better Futures, Local Solutions program – part of the $3 billion workforce participation package announced in the 2011-12 Budget – is a great example. Better Futures, Local Solutions takes a “place-based” approach in 10 locations across the country aimed at boosting social and economic participation and reducing entrenched disadvantage. An important part of this policy is the Local Solutions Fund which supports local non-government community partners to deliver innovative, locally driven solutions.

Importantly, Better Futures, Local Solutions brings together social and economic objectives. It leverages off the resources of private and non-government actors in the community to create a strong economic base to address entrenched disadvantage.

Goodstart is another example of a successful financing model between the government, Not for Profits and the private sector. Established as a Not for Profit social enterprise after ABC Learning went into voluntary liquidation, Goodstart has been re-financed with a mix of investment from the Australian Government, high net worth individuals and commercial lenders.

In the report, Investing for Good: the development of a capital market for the not-for-profit sector in Australia, the Senate Economics Reference Committee recommended increased collaboration between government, business and the Not for profit sector to give greater access to private sources of funds.

We need to become better at measuring our progress and the outcomes of this transition to collaborative models of service delivery which centre on Not for Profit organisations. Shared value models will only succeed where they are supported by robust data and outcomes focused evaluations.

We also need to work harder at improving the relationship between government, the Not for Profit sector and business. This is one of the reasons why the Federal Government’s National Compact with the Not for Profit sector is so important. It establishes principles based on mutual respect and commits the Government to improved cooperation and partnerships with the Not for Profit sector.

The significant growth of the Not for Profit sector and the current constrained fiscal environment has created a pressing need to develop new ways to fund service delivery.

Despite the challenges, there should be no turning back. If we are to make progress on some of the most important issues facing Australian communities, government, Not for Profits and the private sector must work together to overcome these challenges and embrace initiatives that create shared value.

Mark Butler MP is the Federal Minister for Social Inclusion, Minister for Mental Health and Ageing, and Minister assisting the Prime Minister on Mental Health Reform.