Sweeping human services overhaul depends on government stewardship

By Stephen Easton

Friday June 2, 2017

The Productivity Commission has released a set of draft proposals for how choice, competition and contestability can reshape six kinds of human services it identified as ripe for reform in a preliminary study last September.

The idea to “put the people who use human services … at the heart of service provision” is what drove the PC report that led to the National Disability Insurance Scheme, and the concurrent and closely related aged care reform proposals that have had far less policy impact so far.

Like any advice to government, the PC’s reports can have a lot of impact or very little. And the job it has been given this time, to identify several separate types of social assistance at the same time that could be improved through market-based reform, leading to a consideration of six all at once, seems unusually ambitious.

The commissioners warn: “Competition and contestability are means to an end and should only be pursued when they improve the effectiveness of service provision.”

“Governments will (or should) always have the role of system stewards.”

Early in, the draft report states there are “sound efficiency and equity reasons” for governments keeping their role as the primary funder of most human services, and in deciding who is entitled to the benefit of that funding: “Markets left to their own devices would not deliver the appropriate level, or distribution, of human services across the community.”

But as always, the PC’s “starting point” is that people should have as much choice as possible over how they receive human services they are entitled to, although it acknowledges this is limited by what is available, and exercised by proxy for some members of the community.

Putting more choice in the hands of people who need social services, or the addition of contestability in government contracting arrangements, can certainly upset the service providers. The PC notes:

“Some were sweeping in their rejection. Anglicare Australia, for example, in its submission did not accept that competition is a driver of efficiency; that efficiency is an inherently good thing in human services; that the innovation that comes with competition between providers is of benefit to service users; or that it is appropriate to equate individual consumer choice with agency and wellbeing.

“Others were more specific, describing the harmful effects of competition and contestability, including providers focusing on writing tender applications at the expense of their core business, and competition damaging the collaboration between providers needed to drive positive outcomes for users with multiple and complex needs.”

The PC agrees user choice is not always appropriate, but says “the onus should be on those seeking to remove choice to justify why” and points out the only other option is for governments or providers to make the choices.

One big caveat to the draft proposals is that where the PC does believe competition and contestability can help, “careful stewardship” by governments is required, and it acknowledges that is easier said than done.

Government stewardship more important than ever

“Governments will (or should) always have the role of system stewards,” the report states. It also acknowledges this complex responsibility for the overall effectiveness of social services — involving “policy design, regulation, oversight of service delivery, monitoring of provider performance” and continuous improvement — is difficult to fulfil.

In each of the six types of human services, the best way to play that stewardship role will be different, according to the PC, but its inquiry has identified three general areas for improvement.

Co-ordination between levels of government, agencies, and service providers:

“Coordination problems can arise between governments, agencies and providers when, for example, services are funded by more than one level of government, or when services delivered by one provider duplicate or detract from another’s.

“In some cases, policy is developed in government silos which can lead to competing objectives, and stewards losing sight of the users’ overall wellbeing.”


“The provision of information to improve accountability and facilitate performance assessment can benefit all parties within the human services system. Without it, users are unable to assess providers, providers are unable to plan their services, and governments cannot effectively evaluate how providers or systems are performing.”

Smoother reform transitions:

“Policy reform in human services is a complex and delicate task. Reforms can be large, costly and disruptive to users and providers, take considerable time to fully implement, and affect the lives of many (sometimes vulnerable) users. Better planning and preparation for change should aim to preserve continuity of outcomes and minimise any negative effects on users from the transition.”

To the last point, the report adds that transitions between different service providers — from government agency to private or non-profit provider, for example — can also be “disruptive” and suggests “information and clarity about changes in advance can help” with the trust-building process.

The PC also explicitly rejects the recurrent idea that for-profit companies should be barred delivering from any kind of human services:

“Experience suggests that no one type of provider has a monopoly over good service provision and each has had their share of successes and failures.

“Governments need to focus on the capabilities and attributes of service providers when designing service arrangements and selecting providers — not simply the form of an organisation. Governments, as stewards, need to ensure that all providers meet minimum standards and have incentives that align with users’ and governments’ objectives.”

Upfront costs, long-term benefits

The PC doesn’t beat around the bush about the failings of the current state of affairs in social housing, support to remote Indigenous communities, end-of-life care, family and community services, public dental services and public hospitals.

“Social housing is broken, unfair and is failing those in need,” social policy commissioner Richard Spencer argues. “People in the community who need the security of social housing can wait 10 years or more for a place to become available.”

Rent assistance should be increased by 15% to catch up with the market, and should be indexed so it continues to keep pace, the report recommends. Commissioner Stephen King notes this “well overdue increase” has been proposed by plenty of others before.

Palliative care is highly variable in quality and in short supply; more home-based services should be the focus of expansion, the report proposes, because that is where most of us want to spend our final days.

“We need to see vast improvements in end-of-life care services both in homes and residential aged care facilities,” says Spencer. “We see far too many people stuck on a ‘medical conveyor belt’ at the end of their lives instead of getting the care they want, where they want.”

The inquiry has also confirmed a “surprising” lack of palliative care services in nursing homes. “Four out of five residents of aged care facilities die there,” Spencer adds. “But many often make traumatic and costly trips to hospital to receive end-of-life care that could have been provided in surroundings that are by now familiar to them.”

Greater choice is not the answer for family and community services, according to the PC, but it finds a lot of problems for governments to fix through its stewardship role:

“Current approaches to commissioning family and community services are not delivering the benefits they should. Poorly designed contracting and contestability arrangements are hindering the ability of providers to deliver outcomes for users.”

For services delivered into remote indigenous communities, the PC recommends governments focus on enhancing processes for selecting and managing service providers, giving them longer contracts, and putting in place better planning, evaluation and feedback systems.

More choice for users is front and centre for public hospital and public dental services. For the former, the PC prescribes more detailed public reporting on the performance of individual hospitals and specialists — as well as efforts to make it easier for patients to choose specialists on referral from a GP, or outpatient services after leaving hospital.

“Public dental patients have little choice in who provides their care, when and where, and most services are focused on urgent needs,” the commission states frankly. “Patients’ choice and outcomes could be improved by a new payment and care model, with a focus on preventive treatments.”

The draft report will now be pored over and picked apart by a huge group of stakeholders in coming months.

Each set of recommendations is based on analysis of factors affecting quality, equity, efficiency and accountability / responsiveness. The PC’s aim is to improve the community’s wellbeing overall, but there will be trade-offs:

“The proposed reforms to introduce greater user choice, competition or contestability would affect the attributes of effectiveness in different ways and, in some cases, negatively. Some reforms may lead to large increases in quality, with minimal effects on the other attributes.

“Some may lead to increases in the attributes across the board. The potential costs and benefits of reform will also fall unequally across the community.”

There will also be higher costs for governments, especially at the outset, but — again, like the NDIS — the benefits are expected to outweigh the costs over time, broadly as a consequence of having a healthier, happier society.

The commission also calls out one issue that always affects national reforms — the costs and benefits will not be evenly shared between the federal, state and territory governments — and urges Australia’s politicians not to let this stand in the way.

The final recommendations are due in October.

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