More competition brings significant risks to human services

Monday March 26, 2018

The Australian Council of Social Service today cautioned that introducing further competition into human services provision carried significant risk, in response to the tabling of the Productivity Commission’s report Introducing Competition and Informed User Choice into Human Services: Reforms to Human Services.

The report, tabled following an Inquiry by the Productivity Commission, includes a number of proposals that are welcomed by ACOSS, but a number of proposals that would create problems in the delivery of human services.

ACOSS CEO Dr. Cassandra Goldie said:

“The Productivity Commission Report is a “mixed bag”, and includes some proposals that are positive, and others that will damage human service delivery in Australia.

“The reality is that finding examples of human service delivery that lend themselves to further competition or contestability is challenging, if not impossible.

“We’ve seen how disastrous the experiment has been in other areas where competition has been introduced, like in vocational education and training. It has led to costs rising, consumers being placed in inappropriate courses through aggressive sales practices, and quality reducing significantly across the sector.

“The Productivity Commission report clearly demonstrates that any further expansion of competition in human services carries risks, and in significant areas has recommended that further competition is not appropriate at this time.

“In some areas, the Commission has correctly identified that the top priority should be further investment to meet demand. When we have such significant gaps between demand and supply in human services the priority should be on meeting that demand, not introducing greater competition.

“Importantly, the Productivity Commission recognised that unlocking the potential benefits of competition or contestability in human services markets requires careful stewardship from governments and there are instances where neither competition nor contestability are appropriate.

“There are some real positives to come out of this report. The Commission has made some interesting recommendations that have the potential to improve how family and community services are commissioned and contracted. Importantly, this includes increasing contract lengths to seven years for most not-for-profits, and to ten years for services in remote Aboriginal and Torres Strait Islander communities. Longer contracts provide greater certainty for organisations delivering services, and that certainty supports better service planning and the development of long term, stable relationships with people using the services.

“The Productivity Commission believes that both not for profit and for profit providers should be involved in the delivery of human services. Not-for-profits, are focussed on their mission, and often service remote localities and work with the most complex clients. They usually reinvest surpluses in service delivery, ensuring that funds invested remain in the service system. These are just some of the ways that not-for-profits add value to the services they deliver.

“On the other hand, we know that for-profit providers are focussed on making a profit, and will prioritise services that generate the highest profits. They also take vital money out of the service system through dividends to shareholders.

“We need to put people at the heart of how we determine what services are needed, and how we design the services that will be delivered. We don’t need more competition to achieve that.”

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Contact:  Australian Council of Social Service, 0419 626 155