NSW home care sell-off ‘demonstrates trust’ in public sector mutuals

By Stephen Easton

Friday September 4, 2015

The peak body for co-operatives and mutuals says the NSW government’s decision to sell its home care business unit to Australian Unity demonstrates growing trust in the idea of member-owned companies to deliver government-funded social services.

“The sale … highlights the government’s trust in mutuals to provide health and social care services for the elderly and disabled citizens of Australia,” said Melina Morrison, CEO of the Business Council of Co-operatives and Mutuals, a relatively new peak body for the sector that was established in 2013.

Melina Morrison
Melina Morrison

Australian Unity has bought Home Care Service NSW lock, stock and barrel for about $114 million, which the government will invest in a fund to assist with the transition to consumer-directed funding under the National Disability Insurance Scheme. The sale is expected to go through early next year.

All staff and clients of the service, which has a 70% market share, will transfer to the big mutual. Staff employment terms and conditions will remain the same under the transfer agreement, according to Australian Unity, and the union many of them will join after the deal seems quite pleased with the arrangements. Unusually for a union representative, United Voice assistant secretary Mel Gatfield gushed praise for the privatisation, describing the reaction of the workers to the announcement as “a sigh of relief”.

On the other hand, the Public Sector Association has opposed the privatisation deal all along and says its members are being short-changed in the transfer of entitlements that United Voice has endorsed. The PSA argues its members should have options for redeployment in the public service or voluntary redundancy, and that their employment conditions will not be legally guaranteed after the transfer, which will cut thousands from its membership list.

The sale to the massive mutual company, which is well regarded in the aged care and disability support sectors, has calmed fears that privatisation would lead to a deterioration in service quality and access, especially outside metropolitan areas where the cost of care is far higher. In particular, there was concern in the sector earlier this year about what would become of one part of the home care business unit that works specifically with Aboriginal communities, but those worries appear to have evaporated with the announcement of the deal.

A statement from Australian Unity said the Aboriginal home care unit would retain “its important and unique identity, delivering culturally appropriate services across NSW”, a pledge that Melina Morrison and the United Voice assistant secretary both welcomed. Gatfield said:

“Home care workers are glad to hear that the service will not be broken up and will be able to continue to offer quality care — no matter where you are, be it rural or regional areas or in the city — and no matter who you are, by continuing to provide the specific Aboriginal home care services for Indigenous Australians.”

Australian Unity’s chief executive of retirement living, Derek McMillan, said he planned to not only ensure continuity of service but improve and expand on what the NSW government has delivered to date.

But some insiders say the government Home Care Service’s delivery costs are too high for it to maintain its 70% market share when privatised next year, and that it will continue to be subsidised by the NSW taxpayer for several years as part of the deal. As Australian Unity takes its new home care business through the shift to consumer-directed care funding under the NDIS and reforms to the federal aged care system, it is likely to undergo significant change.

The move is “the first significant transfer of [ageing, disability and home care] services to the non-government sector” in NSW, according to the NSW Department of Family and Community Services. But the deal is not so unusual — plenty of social services are delivered by not-for-profit organisations and for-profit companies alike on behalf of state, territory and federal governments all over Australia, and the type of work is right up Australian Unity’s alley too.

More interesting and possibly much more transformative of Australian governments — not necessarily in a good way, according to the Community and Public Sector Union — will be the emergence of employee-owned public sector mutuals, a few of which have sprung up in the UK. The right models of employee ownership might boost productivity and bring a wealth of other benefits for clients and employees, as well as savings for taxpayers.

Home care can easily be delivered by employee-owned mutuals — such as Co-operative Home Care — as well as by independent carers hired through an Uber-style service like Better Caring, or through other privately owned or not-for-profit providers. Australian Unity’s formerly government owned business unit will need to compete with these other models in the era of consumer-directed funding.

A Senate inquiry is currently considering the “role, importance and overall performance” of co-operatives and mutuals, with a report due in November. In a submission to that inquiry, Australian Unity contends:

“Governments … should more readily consider the mutual model as an alternative to traditional privatisation.

“Larger mutuals offer an alternative service delivery channel for governments that does not carry the same level of public policy risk as outsourcing to profit-maximising shareholding companies and other forms of privatisation. In many cases, larger mutuals have a stronger resource base and business model than most charities.

“Just one example of such activity, apart from Australian Unity’s own activities, is that of the RAC (WA), which has brought its significantly sized operations to the delivery of community care through its St Ives business. St Ives is a significant provider of care to older Australians.”

Last year the BCCM released a white paper on the concept of public sector mutuals, which was strongly supported by then Social Services Minister Kevin Andrews. But in its submissions to the Senate inquiry, the CPSU has expressed concerns that the UK experience demonstrates the idea of employee ownership being used as cover to force privatisation of services to the benefit of certain investors, at a cost to their citizen-clients and employees.

Top image: Australian Unity Retirement Living CEO Derek McMillan, left, and Australian Unity group managing director and CEO, Rohan Mead, sign the deal with NSW Minister for Ageing and Disability Services John Ajaka, centre. Image from Australian Unity Twitter account.

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