NFPs Caution on Human Services ‘Competition’

The Not for Profit sector has cautioned on a recommendation to extend competition policy into human services as a priority in the Final Report of the Competition Policy Review released by the Federal Government.

The Government commissioned Professor Ian Harper to undertake an independent ‘root and branch’ review of competition policy, said to be the first comprehensive review of Australia’s competition framework in more than 20 years. The Competition Policy Review’s Final Report makes 56 recommendations for reforms across three key themes: competition policy, laws and institutions.

Welfare peak body, the Australian Council of Social Service (ACOSS) said competition policy doesn’t exist in isolation but needs to suit the social, economic and environmental environments to which it applies.

“We welcome the Report’s recognition of the importance of collaboration in human services for the community and its focus on consumer choice. However, we are concerned about the recommendation of deepening and extending competition policy in human services as a ‘priority reform’,” ACOSS CEO Cassandra Goldie said.

“To date, the community sector’s experiences of privatisation in health, childcare and employment services point to price inflation, higher costs to Government, less collaboration and questionable outcomes for the community.

"The lessons from a lot of the best outcomes in communities is that you can’t always scale approaches nationally. Communities identify and meet their own needs in various ways and funding options, including from governments, need to reflect this.”

The Competition Policy Review said that establishing choice and contestability in Government provision of human services can improve services for those who most need them.

In the area of human services, the Review recommends that:

• User choice should be placed at the heart of service delivery;

• Governments should retain a stewardship function, separating the interests of policy (including funding), regulation and service delivery;

• Governments commissioning human services should do so carefully, with a clear focus on outcomes;

• A diversity of providers should be encouraged, while taking care not to crowd out community and volunteer services; and

• Innovation in service provision should be stimulated, while ensuring minimum standards of quality and access in human services.

“The Panel acknowledges that choice is not the only important objective in the area of human services. Equity of access, universal service provision and minimum quality are also important to all Australians,” the Review said.

“In considering whether it should recommend change in this area, the Panel does not wish to discourage or crowd out the important contribution that Not for Profit providers and volunteers currently make to the wellbeing of Australians.

“Where Governments retain some control over the delivery of human services, a diversity of service providers and high-quality outcomes for users can be encouraged through careful commissioning. Governments need to allow room for providers to innovate in response to changing user demands, and to benchmark the performance of providers, credibly threatening to replace those that do not meet the needs of users.”

ACOSS said in a joint submission to the review that it supports the principle that individuals, particularly those who are disadvantaged, should be empowered to make choices about which services best meet their needs.

“But reforms need to build on evidence of the Australian experience to date,” Goldie said.

"We should not assume that greater market competition will produce better options for people.

“Competition can also result in a race to the bottom on price, with the result being either that organisations are forced to deliver a poor quality service or to deliver services at a loss. Larger organisations may be able to cross-subsidise poorly funded programs but this option is not available for smaller providers.”

UnitingCare Australia said it welcomed the focus in the Report on the role of competition in increasing choice, control and diversity for people using human services.

“We want to see people being able to choose the care that best suits them,” National Director of UnitingCare Australia, Lin Hatfield Dodds said.

“However, as the report acknowledges, it is critical that people’s choices are informed and empowered. Vulnerable people who have had minimal capacity to exercise choice in their lives may require support to gain the skills, capability and confidence to choose services that will meet their particular circumstances.

“If competition is introduced to human services, it does not negate Government responsibility to ensure quality access to services for all.

“One issue that does not receive enough focus in the Competition Policy Report is a recognition of the unequal position government is in when contracting services. Their market power can negatively impact on competition and the delivery of empowered choice for consumers. The Government should look to establish itself as ‘model contractor’ by obliging itself to: respect the independence of the contracted party; provide scope for genuine negotiation; and allow all parties to seek fair and reasonable terms and conditions.

“Competition mustn’t become a blunt instrument for driving down costs. If competition is based simply on price, or outcomes are not broad enough, it can do more harm than good. Competition in human services should be used to drive innovation, client-focussed care and higher quality provision. This is difficult, but essential.”

Anglicare Australia has also cautioned the Federal Government against locking on to a business model for the delivery of human services at the expense of investing in human relationships and connectedness, in the mistaken belief that it will be more efficient and effective.

“The Review’s support for diversity, choice and innovation in human services is to be welcomed, but its lack of discussion on the risks of shifting towards a less inclusive business model is a concern,” Executive Director Kasy Chambers said.

“Much of the best care and human service work is built on relationships and on investing in community connection.

“The purpose of Not for Profit  organisations is the clue to their effectiveness, and the best social service innovation comes from those community organisations that are closely connected to the people they serve.

“The efficiencies which come from business relate to services that are transactional. And so there is no reason to assume, for example, that a community partnership would be better placed to supply petrol or provide a hotel room, where everyone’s money is the same.

“But when it comes to care or support for someone who is frail or isolated, then a business model is simply less likely to support the kind of transformational change that person might require. Save the Children and Wilson Security, and before them Transfield and Serco, have all played role in the Australian government-run detention centres in Nauru and Papua New Guinea. Recent events seem to have cast the Not for Profit providers in a better light than their business partners for the care they tried to offer the detainees.

“Let’s not leave people behind in our rush towards an even more profitable and competitive economy. Let’s invest in the kind of services that are about how we connect with each other. And the benefit of that, in the end, will be for us all.”

The Review is calling for submissions on the final report and the closing date for submissions is Tuesday, 26 May 2015.

Written submissions should be addressed to:

General Manager

Small Business, Competition and Consumer Policy Division

The Treasury

Langton Crescent

PARKES ACT 2600

Email: competition@treasury.gov.au