Backing Up or Carving Out? The Role of Government in Supporting Social Enterprise

Recognition of the role of social enterprises and intermediaries is needed in Australia to clarify their place in, and importance to Federal policy and the economy more broadly writes Christopher Mason, Senior Research Fellow for the Swinburne Centre for Social Impact.

We have seen increasing public support in social enterprise at Government levels in recent months. Much of the hands-on work involving government and the sector commonly occurs at State and local levels. However, with the launch of the Public Service Mutuals White Paper in September by the Business Council for Co-operatives and Mutuals (BCCM), the impending release of the final report of the Review of Australia’s Welfare System (the McClure Welfare Review), as well as the ongoing roll-out of the National Disability Insurance Scheme are all (or will be) significant with respect to social enterprise development in Australia.

So is it time to reconsider the place and importance of social enterprise in Federal policy? Further to this, to what extent are we ready for social enterprise to be a central vehicle in policy development and implementation?

The Public Service Mutuals White Paper, of which the Federal Government has a keen interest, outlines a ‘third way’ for more effective and appropriate public sector service delivery. The gist being that new types of providers would be more effective at meeting the demands of service users, and they should be encouraged to tender accordingly.

Having taken its lead from the development of Public Service Mutuals (PSMs) in the United Kingdom, the BCCM suggests these reforms would offer greater diversity, innovation and professionalism in how public services are delivered, whilst increasing consumer choice. That mutuals are suited to and can deliver on these goals is relatively untested – and some UK commentators have claimed they may represent a front for increasing privatisation. In an Australian context, it’s worth asking how far such mutualisation can go in a highly residualised approach to welfare.

Irrespective, developing PSMs will only suit larger social enterprises and it remains unclear if there will be a knock-on benefit to the wider community sector service providers. It is notable that, despite the Federal Government’s back-step from the rhetoric of the Big Society experiment, mutuals are one of the social enterprise models favoured by the UK Government.

And as Peter Hunt of the UK advocacy organisation Mutuo, remarked in 2013: “The problem is that the Cabinet Office has unilaterally re-defined ‘mutual’… it has decided that mutuals are synonymous with employee owned businesses”. Hunt  goes on to argue that rather than encouraging all co-operatives/mutuals to tender for public service delivery, the UK government has ‘redefined’ what constitutes a mutual. This is to “try to make entrepreneurs of public servants, make them more business-like and efficient.”

This begs the questions – who is in, and who is out? What sort of place is the Federal Government intending to carve out for social enterprises? Aside from mutuals, what place for different social enterprise models within the public service reform agenda?

One answer to this might reside with the forthcoming full report of the McClure Review, which focuses on policy domains relevant to social enterprises, especially employment, families and communities. Since social enterprises are highly active across these areas, specifically in what are known as intermediate labour market programs, we might expect more encouragement and opportunities.

The Interim Report suggests as much, stating that “investments by Government, business and civil society play an important role in strengthening communities.” It goes on to state that “the growth of social enterprises highlights that this approach can achieve sustainable employment outcomes for disadvantaged job seekers”, citing a number of examples where social enterprise intermediaries have played a role in improving employment outcomes for disadvantaged Australians.

The Interim Report remains thin on detail – and arguably frames social enterprise narrowly as a recent product of a nascent intermediary infrastructure when in fact it has been a long-established model in labour market transition. Yet it does point to strong interest among a critical Government advisory group likely to substantially influence Federal policy and resourcing going forward.

Indeed, we might see developments similar to the creation of a new quasi-market with the National Disability Insurance Scheme. The Scheme represents a major shift in the social enterprise landscape, and it is expected that social enterprises will feature significantly as the roll-out ramps up over the next few years.

We know that social enterprises can offer community-centred, innovative solutions to endemic social and environmental problems, but not all social enterprises are innovative or can appropriately service public sector markets. However, many are effective at achieving their stated mission and engaging with their communities.

This points to a disconnect in Government planning in the social economy – social enterprises aren’t a ‘one-size-fits-all’ solution, and neither is social policy. So recognition of the role of social enterprises and intermediaries is needed to clarify their place in, and importance to, the economy more broadly.

These political moves indicate a welcome and tentative backing for particular kinds of social enterprise development, signifying a slow shift in how the sector is supported by Government. However, in order for social enterprise to reach more widely across our communities, we need to conceive of social enterprise  as more than a market opportunity, and instead an essential part of the fabric of local economies and communities.

About the author:

Dr Chris Mason joined the Faculty of Business & Enterprise at Swinburne University in 2011 having taught in the UK for more than seven years, and was appointed as Senior Research Fellow for the Swinburne Centre for Social Impact in 2013. His research interests cover social enterprise, policy development, discourse, identity and corporate social responsibility (CSR). Mason coordinates collaborations between discipline groups in the Faculty and between Faculties at SUT.

Mason’s work at the CSI centres on developing collaborative projects with civil society, public and private organisations, generating novel insights into the social impact of their operations. Chris plays a developmental role for social enterprise in Australia, raising awareness of their work through high quality research that has been published in the Journal of Business Ethics, the Journal of Services Marketing. Business Ethics: A European Review and the Journal of Social Entrepreneurship.