Competition Failing to Deliver in Human Services, Report Says

The government has overestimated the benefits of increased competition in human services, which is largely failing to deliver better outcomes for people, a new report says.

Researchers examined two areas of human services subject to significant combinations of choice, contestability and competition in recent years – vocational education and training (VET) and employment services.

After extensively assessing the outcomes achieved, researchers concluded there was a strong tendency for government to “overestimate the benefits of competition, while underestimating the complexity of getting the right regulatory structure”.

“To this end, the costs of ‘learning by doing’ are largely disregarded, even though it is extremely disruptive to have sectors in a constant state of policy flux,” the report said.

“Nonetheless, there appears to be an unshakeable faith that, with the right regulatory framework, the benefits of competition will be delivered and will be worth the attendant costs (both to the community and individuals).

“On the basis of the case studies contained in this report, such faith appears to fly in the face of experience.”

Competition in human services has largely failed to deliver better outcomes for people – Media Release https://t.co/7RS2U2LHS3 it’s a point we also made in various submissions to the PC thanks @ACOSS @choiceaustralia

— National Shelter (@NationalShelter) September 12, 2018

Researchers also said while most policy changes specified an objective, it was “difficult to know exactly what the introduction of increased competition [was] intended to achieve”.

The report was commissioned by the Australian Council of Social Service (ACOSS) and CHOICE.

ACOSS CEO Dr Cassandra Goldie said the findings highlighted the “significant risks” of introducing further competition into human services.

“Where competition has been introduced in vocational education and training, it’s led to rising costs, people being placed in inappropriate courses through aggressive sales practices, and a significant reduction in quality across the sector,” Goldie said.

“In employment services, ‘marketised’ service delivery has led to private providers focusing their efforts on people who are job-ready rather than people who need more assistance. That’s part of the reason why so many people remain unemployed for 12 months or more.

“Further, choice for people who are unemployed is severely restricted by the harsh benefit compliance system, which employment service providers play a major role in administering. The current model of employment services, and its predecessors, have left people behind.”

New report from @ACOSS and @choiceaustralia about competition in human services.

"there appears a strong tendency to overestimate the benefits of competition, while
underestimating the complexity of getting the right regulatory structure." https://t.co/FwpK5vk0Jk

— El Gibbs (@bluntshovels) September 12, 2018

CHOICE CEO Alan Kirkland added that introducing competition into sectors like vocational education and training was unlikely to help consumers, and “could in fact be harmful”.

“Our first priority should always be to ensure that people have equitable access to good quality services. Competition, especially where it involves for-profit service providers, should only be pursued where it will help achieve this,” Kirkland said.

This research follows a recent Productivity Commission report examining reforms to human services.

The commission said the focus should be put on users especially through competition and contestability.

“Used well, competition and contestability can be a powerful mechanism for improving the effectiveness of service provision,” the report said.

“Competition (as an adjunct to user choice) delivers strong incentives for providers to be more focused on people who use services.”

This recommendation was strongly rebuked by ACOSS and Anglicare.

Anglicare Australia executive director Kasy Chambers told Pro Bono News at the time that the provision of human services could not be left to the market.

“We have seen marketised approaches fail in health, energy, and vocational education. We do not want to repeat those mistakes in social housing and other critical services,” Chambers said.

“That’s why we should focus on putting people at the centre of human services – something that the market won’t do on its own.”