Privatisation by stealth: The Abbott/Turnbull Government and Centrelink

'What I am basically saying is that welfare must become a good deal for investors, for private investors. We have to make it a good deal for the returns to be there, to attract the level of capital that will be necessary in addition to the significant injection of capital and resources that is already provided by the Commonwealth.'

Treasurer Scott Morrison

 

If 2015 was Centrelinks 'anus horribulus', with complaints up 35 per cent in just two years, and more than 62,000 grievances reported through official government channels in the past financial year, then the next few years are only going to get worse for the beleagured agency and the people who are forced to use its services.

 

The privatisation of Centrelink, long predicted by analysts of the social welfare policies of the Abbott/Turnbull Government and promoted by current Treasurer and former Social Services Minister Scott Morrison, is accelerating, and will only worsen Centrelink's dismal performance and reputation.

In March 2015 Kelly Tranter wrote about Government plans to privatise Centrelink.

 

As Tranter points out, the 2014 report of the Government's National Commission of Audit recommended the Government investigate “options for outsourcing part or all of the Department of Human Services payments system, including Centrelink.  

The report paved the way for the Government’s plan to move towards privatisation of the Department of Human Services including Centrelink, Medicare and Child Support services.
 

Aware of the political risks of the direct privatisation of Centrelink,  the Abbott/Turnbull Government has adopted a strategy of  'privatisation by stealth and increments'.

In September 2015, the Abbott/Turnbull Government and the Department of Human Services sought bids from private sector partners  under its billion-dollar, "once-in-a-generation” welfare systems replacement for the software platform to support a new payments engine.

Outsourcing of Centrelink services is another form of privatisation by stealth.

 

Since 2012 Telstra has run Centrelink's phone services, after it won a 5 year contract to connect  Medicare, Centrelink and Child Support and provide mobile voice, broadband and support services for over several thousand staff across more than 855 sites. Telstra has lost up to $90 million on the deal.

 

The losers in this outsourcing arrangement include callers to Centrelink phone lines, who have seen services grow worse since the deal was signed in 2012, taxpayers who have seen little value from the outsourcing and Telstra's shareholders.
 

A number of Centrelink call centres have been outsourced to corporate operators since 2014 when Telstra took over a number of call centres and there are plans to outsource all call centre operations to Telstra.

Privatisation by stealth also occurs through benign neglect. This occurs when Government runs down and undermines the capacity of  Centrelink to perform its responsibilities, through staff cuts and staff freezes; outsourcing and fragmentation of services to private providers who deliver poorer quality services; constant changes to policy and eligibility requirements; underfunding, funding cuts and restrictions; constant restructuring; failure to address problems and failure to invest in systems, process and technology to meet demand.

The result is poorer quality service, ineffectiveness and the resultant lack of public confidence, which is used as evidence to justify handing over the agency's responsibilities to private sector providers, on the grounds they will deliver services more effectively and cheaper (which is untrue).
 

The extent to which the capacity of Centrelink is being undermined by the Abbott/Turnbull Government to justify privatisation is evident in the range of problems it faces:

• An Auditor-General' report in May 2015  found almost a quarter of the 57 million phone calls made to Centrelink last year went unanswered, and Australians spent 143 years waiting in vain to speak to the agency in 2013-14, before simply hanging up. About 13.7 million calls did not make it  to even the point of being put on hold, after they were blocked or received a "busy signal".

• The Australian National Audit Office’s Management of Smart Centre’s Centrelink Telephone Services Report showed that approximately 40 per cent of all incoming calls result from failed online or self-services and the growth of digital transactions has not reduced demand for call centre services as was anticipated.
• The department was savaged in a midyear National Audit Office report for its customer service performance and ended the year plagued by serious website malfunctions. In November and December, clients suffered through weeks of disruption to the Centrelink websites used by millions of Australians to manage their payments and report their work activities. The agency was forced to apologise after weeks of "intermittent issues" left many clients unable to log onto their account
• A New Year’s Day glitch caused 70,000 people to be told they owed up to $800 to the Government.
• DHS staff wages and conditions have been under attack  The 2014-15 Australian Public Service ‘State of the Service Report’, shows that only 59% of APS staff believe they are paid fairly, down from 67 per cent last year.
• The Minister has failed to respond to Audit Office and Ombudsman reports which note service delivery failures in customer identity protection, call wait times, online and face to face services.
• The Commonwealth Ombudsman’s follow-up review of service delivery complaints at Centrelink has revealed that problems have persisted for more than 18 months after his initial report was published in April 2014.
• Clients are being "shooed away" from Centrelink offices and told to take their problems online, resulting in an avalanche of complaints.
• Frontline staff are facing a 20 per cent increase in instances of customer aggression, blamed by the opposition and unions partly on frustration at the agency's customer service performance.

The Australian Unemployment Union (AUU)- an organisation of the unemployed, for the unemployed that fights for a fair and humane welfare system for all-  argues that  Abbott/Turnbull Government plans to  hand over the responsibility to make income support payments to local service providers, both corporate and NFP providers, instead of Centrelink, is further evidence of the privatisation of Centrelink. 

 

The legislation, to be phased in on July 2016 will initially effect around 2000 unemployed workers. 

The legislation will give job agencies unprecedented and sweeping new powers over the lives of unemployed workers.

 

The AUU currently has a petition** here opposing plans by the Abbott Turnbull Government to privatise Centrelink by handing over to local service providers the responsibility to make income support payments instead of Centrelink.

 

The full text of the AUU petition is below:

In December 2015, the Coalition Government introduced legislation to reform the rural Community Development Program (CDP) "so that local service providers will make income support payments instead of Centrelink". The legislation will be phased in on July 2016 and will at first effect around 2000 unemployed workers.

This is the beginning of what we have all been dreading: placing the functions of Centrelink in private hands, or in other words the privatisation of Centrelink.

Putting the functions of Centrelink into private hands is a recipe for disaster. Byputting a profit motive into the Social Security System, every Australian citizen's right to Social Security is under threat.

In an ominous press release, the Minister for Indigenous Affairs Nigel Scullion stated “under these reforms, there will be more local decision-making by providers who know the jobseekers and have closer connections to what is going on in communities. Payments will be made weekly so remote jobseekers have immediate access to their money and feel the financial impact of not turning up to activities straight away – not weeks down the track."

Currently, legislation states that the employment services industry is not able to make compliance decisions as these decisions must be made by Centrelink. It appears that this legislation aims to change that, giving job agencies unprecedented and sweeping new powers over the lives of unemployed workers.

Starting the privatisation of Centrelink in the rural Community Development Program is yet another example of the Government using Indigenous Australians as guinea pigs to test its new cruel and unusual policies towards the unemployed.

The Government hopes that if they privatise Centrelink out in the remote areas of the Northern Territory no one will notice. We have noticed and we think it's disgraceful.

An attack on one unemployed worker is an attack on all workers. We must stand in solidarity with our Indigenous brothers and sisters before it's too late.

Sign this petition and let the Government know we firmly oppose its attempts to privatise Centrelink.

******************************************************************************

 ** Other petitions by the AUU are here, including one calling for the prosecution of Max Employment over allegations aired on ABC 4 Corners Program in 2015 that Max Employment was involved in systemic rorting, gaming and mistreatment of the unemployed.

 

Four Corners aired allegations that  Max Employment regularly sends unemployed clients into "irrelevant training courses" offered by its training organisation arm, thereby enabling Max Employment to collect two separate payments from the Government and maximising its profit in the process.

 

I have blogged about the unlawful practices of Max Employment here and here.

The strategic advantage of non profits and civil society groups

image: Storm Force by John Gaffen www.whitewindmillphotography.co.uk

"After decades of discourse about how nonprofits need to be more businesslike, I am driven to discuss the differences structurally and in more detail. The admonition to be more like a business is a preposterous proposition—ill informed and exhibiting a sloppy state of mind that tries to draw us all off track to a space of unaccountability. Don’t fall for it. For goodness’ sake—if you want to act like a business, be a business! The major distinguishing factor of a business is its ability to build the wealth of individual owners rather than build collective well-being and value. Decide which bottom line you are dedicated to, and make it your own"
Ruth McCambridge

Like Ruth McCambridge, I have long been a critic of those who claim that nonprofits should be more business-like and operate like business to remodel themselves along business and market lines. It is both an ill informed and dangerous claim.

The claim reflects a naive understanding of non profit organizations and is predicated on a false assumption that non profits need a dose of "business thinking" to be more effective and effective.

Others who express similar views to McCambridge and I, include Michael Edwards and Deborah Allcock Tyler.

In her article Use it or Lose it: Frittering Away Civil Society's Strategic Advantage in the excellent online and print journal Non Profit Quarterly, of which she is the Editor, McCambridge argues that non profits have a strategic advantage that they are often blind to because they don't recognize or use it. 

And she argues that blindness to this strategic advantage is leading the nonprofit and civil society sector to lose its opportunity to become more influential, particularly in terms of responding to debates and solutions about important social, economic and political issues.

McCambridge argues that this strategic advantage springs from a number of distinguishing characteristics of non profits that need to be valued much more and worked with in a more conscious and powerful way.  

Strategic advantage is not to be found in the lure of competition, business metrics, market orientation, growth for growth's sake and obsession with money and profitability.

Some of the strategic advantages highlighted in Ruth McCambridge's article include:

• the tradition of collective association and collective endeavor for the common good
• the tradition of being close to constituents and to communities and of providing opportunities to maximise and amplify their voice
• the importance of shared values and collective aspirations
• the importance of scale, particularly smallness and nimbleness 
• close engagement and shared fit between the interests and aspiration of those who run the organization and those who benefit from its activities
• the focus on mutual benefit and the common good
• the tradition of mobilizing people to work together for shared value and of working non competitively in networks
• the important of trust and credibility in the eyes of constituents and stakeholders, rather than public image and brand 
• acting as the vehicle through which constituents and citizens can take action for the common good and mutual benefit
• appealing to common cause and individual aspiration through activity aimed explicitly at common benefit as a way for engaging the energy of stakeholders.
• availing ourselves of our constituents/stakeholders’ unpaid/volunteer labor.

Why the application of market models is misguided and dangerous?

Debra Allcock Tyler and Catherine Walker from the UK Based Directory of Social Change write here on why market based models and market based thinking is counter to the values and raison d'etre of the not for profit sector.

Allcock Tyler and Walker directly challenge the prevailing market based views that are dominant among influential policy makers and decision makers in areas of social policy and human and community services. They write

.....it does seem to be the prevailing view in government circles that charities are simply another source to supply the market. This view completely fails to recognise the fact that charitable endeavour is at its core about altruism. It is not a transactional activity, but a transformational one. And the work of charities is far more than simply the cause. The existence of charities acts as a ‘call to the heart’ of our citizens. Charitable endeavour calls forth in others the desire and willingness to serve others, our communities and our society. The current model of the market applied to our sector is not appropriate. Indeed, it assumes that the market model in and of itself has inherent attributes that work across sectors. There are some core myths about the market model:
(1) market models are the most effective way to deliver the work of charities;
(2) the beneficiary is the same as any consumer, with rational informed desires about where to seek help;
(3) those interacting with charities desire to do so on a transactional basis, for example, givers and volunteers will do so only if an end reward is on offer; and
(4) charities are inefficient and social investment is the way forward.

Allcock and Tyler go on to demolish these myths and argue that the application of market models to the not for profit sector is misguided  and dangerous. They conclude:

Charities are fundamentally an embodiment of the best part of human nature, the best evolutionary bit, the bit that makes us a social being with the common good at heart. Value comes in living a good life. Value is about selflessness not about a price tag imposed in an intrinsically greedy marketplace. This is not piety or sentimentality, nor is it about good and evil, but it is about what kind of charity sector is best for a good, big or better society.

Why demands for greater accountability and stronger governance should be challenged

Very good advice from Helmut Anheier who calls on not-for-profits to resist and lobby against demands  by legislators, politicians, academic think tanks and corporate leaders for greater not- for- profit accountability.

This is a critical issue here in Australia where Governments of all political persuasions and corporate and business leaders demand greater not- for- profit accountability and exhort the sector to "rise to the accountability challenge".

Of course their demand for greater not- for- profit accountability is wholly incompatible with their commitment to reduce accountability and regulation of politicians and political parties, and corporations and business.

Anheier argues (here) that the continual focus on accountability and governance produces undermines the reasons why not- for- profits exist.

Charity leaders must lobby against ever greater accountability requirements, delegates were told at Acevo’s annual conference today.

Speaking at the event in London today, Helmut Anheier, professor of sociology and dean at the Hertie School of Governance in Berlin, said he was concerned about the growing expectation for the voluntary sector to become more accountable.

"Why I’m concerned is that continual emphasis on good governance and accountability will ultimately put non-profits on the defensive, making it very difficult for them to meet these expectations, unless we take a proactive solution and steps in that direction," he said.

Anheier, who was Centennial Professor at the London School of Economics between 2001 and 2009, said the debate about the need for charities to be more accountable stretched back almost 20 years, but was now getting louder.

"It is the ‘audit society’, general institutionalisation, the suggestion that more and more mechanisms are needed to reassure us that things are okay," he said. "This is merged with ideas of good governance, which are now the prime directives for voluntary organisations."

He said that putting emphasis on accountability undermined the reasons non-profit organisations exist.

Innovation in accountability should be encouraged in the charity sector, he said. He advocated demonstrating the academic Jonathan Koppell’s "five dimensions of accountability": transparency, legitimacy, controllability, responsibility and responsiveness.

"It should be acknowledged that full accountability is beyond what non-profits can and should do," said Anheier. "New forms of self-regulation and smart reporting should be encouraged.

"Lobby against new directives for ever great accountability requirements – let’s not overdo it."

UK not for profit leader warns against adopting private sector models

Deborah Allcock Tyler who is the CEO of the UK based Directory of Social Change is a regular vsitor to Australia and always has important and insightful things to say about the Not-for profit sector

Last time she was in Australia she slammed the idea that Not for profits should be more business like arguing that it is offensive how much is written about how NFPs need to be run better and behave more like the business world.

Debra Allcock Tyler addresses the 2010 Think Innovation Summi

Allcock Tyler argues that the constant comparison between practices in the business and Not for Profit sectors is ironic, as it was the failure of corporate governance and banks that plunged the world into a recession.

Allcock Tyler has recently visited Australia again as a guest of the Victorian Department of Communities to speak about the experience of the big society and its impact in the UK, social finance and the role of the voluntary sector in social change.

One of her messages (one that I and many others have been arguing for years) needs to be stated over and over-  private-sector models are not the solution to deeply entrenched, long-term social problems and complex human and community needs.

Allcock Tyler is a strong critic of competitive tendering and contractual approaches arguing that the move to competitive tendering for government contracts creates a view of NFPs as just another delivery vehicle for social services. It creates a system where NFPs are forced to behave more ruthlessly like businesses, in a competitive manner.

 Allcock Tyler argues that competitive tendering creates a psychological shift about who the client is – with a contract the client is whoever is paying, instead of the grant system, where a NFP determines a solution to a problem and takes it to government for funding. It also this means the big organisations get bigger, and the medium and small organisations are left behind.

Allcock Tyler has warned the Australian not- for- profit sector of the dangers of adopting untested and in many cases failed market- based policies, including social finance, social enterprise and payment by results, which are increasingly popular here in Australia among Governments and which are fiercely promoted by academic think tanks like the Centre for Social Impact and the growing number of corporate funded  and business oriented NFP advocacy groups.

Allcock Tyler writes here:

It was a great trip, even though I came away worried that the Australians are following the UK's lead in government engagement with the voluntary sector - which, let's face it, is not going well. I did point out that they really shouldn't follow our example because we're buggering it up badly (they're Aussies - they like a spade to be called a spade, and an expletive to emphasise the point always goes down well).

You won't be surprised to hear that I was particularly scathing about social impact bonds and payment by results. One rather important sort of chap then asked me how I explained the success of the "Peterborough experiment". I was flummoxed. I'd never heard of it and said that if it was that successful people would have been shouting about it loudly.

Amazingly, on my first day back in the UK I was listening to Today when said 'experiment' was referred to by Chris Grayling, the Secretary of State for Justice. The absolute shocker was his statement that the payment-by-results model used in the social impact bond being pioneered at Peterborough prison was hugely successful - although he hadn't yet had the report with the evidence to back up that assertion. It seems the government is so confident this market-based, capital-intensive model is right that it doesn't need the evidence to prove it.

What really riled me was the bare-faced hypocrisy of this. We in the sector are constantly exhorted to provide evidence of need and success in order to get funding - but the government is allowed to get away with rolling out a controversial, highly contested model of funding the sector without providing evidence. How hypocritical is that? Well, it won't work. Private-sector models are not the solution to deeply entrenched, long-term social problems.

A crises parly caused by decades of market driven reform

photo courtesy of ABC News and Micaela Rehle, file photo Reuters)

The crises in the aged care sector is indicative of what lies ahead for the human and communty service sector more broadly.

It is the culmination of 2 decades of market driven reform in which the provision of care and the delivery of human services is marketized, privatized and corporatized.

The report below is from ABC News:

The aged care sector in WA says nursing homes are sacking staff and cutting services in a bid to stay viable, following an overhaul of Commonwealth funding.

Providers predict they will receive up to $24,000 less for each elderly person in their care, under the new funding arrangements.

The head of Aged and Community Services WA, Stephen Kobelke, will attend crisis talks with dozens of stakeholders today.

He says the cuts have put pressure on an industry already struggling to cope.

"Is it sustainable to remain in residential aged care?

"They're the things they'll start to look at; WA providers are deeply concerned about their ability to operate, or in fact their desire to do so.

"They want to look after older people but they've got to have the tools."

Mr Kobelke warns companies have no choice but to cut services and staff.

"Rural providers have already needed to start some sort of downsizing," he said.

Mr Kobelke says the industry is already doing it tough thanks to WA's workforce shortages, building costs and isolation.

More evidence on the failure of the privatization and outsourcing of human and community services

Excellent piece by Bill Mitchell ( Billy Blog) on the two decade long failure by Federal Labor and Conservative Governments of the privatisation and outsourcing of human and community services in the employment support field (what is  now known as the Jobs Services Australia Network).

A 2002 report by the federal Productivity Commission described the Job Network as a ‘managed’ or ‘quasi’ market for the provision of subsidised employment services, which aims to mimic the activities of competitive markets by allowing scope for competition, flexibility in service delivery, rewards based on outcomes and some degree of choice for the unemployed.

First, the Job Network comprises multiple independent agencies, each having a share of a common system of public service provision. Second, the agencies will be a mix of profit and not-for-profit organisations; and third, job seekers do not purchase services but have services purchased on their behalf by government.

Under the Job Network, the government was a purchaser and regulator of employment services, not a direct provider. The role of government was to award contracts through a competitive tender process, regulate providers, determine standards, and to collect and disseminate performance information.

However, this perverse “quasi market” soon revealed it was not immune from market failure.
There was policy schizophrenia in expecting an outcome-based funding model for employment services to deliver ‘better and more sustainable employment outcomes’ in the absence of concomitant policies to alleviate the macroeconomic constraint and create real employment opportunities.
In a highly demand-constrained labour market, characterised by persistent unemployment and marked regional disparities, it was always unclear how the supply-side focus of the Job Network could be effective.established a new industry – with private parasites pursuing a profit motive by meeting perverse performance targets specified in their contracts. These agencies were meant to support the unemployed but quickly assumed a police-type role imposing fines and disciplining the unemployed.

The system failed to achieve any of its stated purposes which were, of-course, not the real roles that the government was interested in pursuing anyway...........................................................................................

Subsequent evaluations of the effectiveness of the Job Network showed it failed to provide sustained employment prospects for the vast majority of the case load.

One of the features of the system that was most repugnant was known as “breaching”. The Government of the day (in 2002-03) reacted to the early criticisms of its failed program by reinforcing what it called the Active Participation Model – aimed at reducing the outlays that were rising as unemployment continued to increase in the face of the on-going failure to stimulate aggregate demand.

The reality is that the new compliance regime that the Australian Government introduced did not address the substantive cause of the mass unemployment – the failure of the economy to provide enough jobs.

It established a new industry – with private parasites pursuing a profit motive by meeting perverse performance targets specified in their contracts. These agencies were meant to support the unemployed but quickly assumed a police-type role imposing fines and disciplining the unemployed.

The system failed to achieve any of its stated purposes which were, of-course, not the real roles that the government was interested in pursuing anyway.

Corporate run nursing homes deliver lower quality care than not-for-profit providers

More evidence of the danger of allowing for- profit corporations to provide human and caring services to vulnerable people.

A major US study  to be published in the Journal Health Services Research has found that for-profit nursing homes deliver significantly lower quality of care than not-for- profit and government run nursing homes.

In the US the 10 largest for-profit corporate providers of hursing homes  operate about 2,000 nursing homes, controlling approximately 13 percent of the country’s nursing home beds.

The study found that the main reason that the quality of care is worse in corporate and for-profit run  nursing homes is that corporate and for- profit providers employ fewer staff  to keep costs down and profits up. In studying staffing and quality in the 10 largest corporate for profit providers of nursing homes the researchers found that the corporate providers  have a strategy of keeping labor costs low to increase profits, with the result that the quality of care suffers and there is a higher number of rated deficiencies.

The researchers found that low nurse staffing levels are the strongest predictor of poor nursing home quality.

The study found that between 2003 and 2008, both the percent of registered nurses and the numbers of all nursing staff were significantly less (30 percent) in the corporate for profit providers than the non-profit homes.  The lower staffing correlated with a considerably higher number of rated deficiencies - the private chains having 36 percent more deficiencies, and 41 percent more serious deficiencies than the non-profits.  Deficiencies include failure to prevent pressure sores, resident weight loss, falls, infections, resident mistreatment, poor sanitary conditions, and other problems that could seriously harm residents.

What is also troubling is that the study found that the quality of care worsened in nursing homes taken over by private equity companies. Nursing homes had more deficiencies after being acquired by a private equity company.This is directly relevant to Australia where private equity companies are increasingly involved in aged care and nursing home provision. The study is the first to make the connection between worse care following acquisition by private equity companies.

"In recent decades, nursing home chains have undergone a considerable expansion.A number of chains were publicly-traded companies until the early 2000s, when five of the country’s largest chains went bankrupt. Following restructuring and ownership changes, as well as increases in Medicare payments, the largest chains became more financially stable. More recently, some of the largest publicly held chains were purchased by private equity investment firms, which invest funds received from investors, with whom they share profits and losses. 

The researchers compared staffing levels and facility deficiencies at the for-profit chains to those at homes run by five other ownership groups to measure quality of care. The 10 largest chains were selected because they are influential in the nursing home industry and are the most successful in terms of growth and market share. 

The study found that for-profit homes strive to keep their costs down by reducing staffing, particularly RN staffing.

The 10 largest for-profit chains in 2008 were HCR Manor Care, Golden Living, Life Care Centers of America, Kindred Healthcare, Genesis HealthCare Corporation, Sun Health Care Group, Inc., SavaSeniorCare LLC, Extendicare Health Services, Inc., National Health Care Corporation, and Skilled HealthCare, LLC.

From 2003 to 2008, these chains had fewer nurse “staffing hours” than non-profit and government nursing homes when controlling for other factors. Together, these companies had the sickest residents, but their total nursing hours were 30 percent lower than non-profit and government nursing homes. Moreover, the top chains were well below the national average for RN and total nurse staffing, and below the minimum nurse staffing recommended by experts.

 The study also found that the four largest for-profit nursing home chains purchased by private equity companies between 2003 and 2008 had more deficiencies after being acquired. The study is the first to make the connection between worse care following acquisition by private equity companies.

There is now a growing body of evidence that demonstrates conclusively that for-profit corporate run nursing homes deliver lower quality care than not-for profit nursing homes.

A study in the British Medical Journal  compared quality-of-care measurements in 82 individual studies that collected data from 1965 to 2003 involving tens of thousands of nursing homes, mostly in the United States. It found that

The authors' meta-analysis, i.e. their integration and statistical analysis of the data from the multiple studies, shows that nonprofit facilities delivered higher quality care than for-profit facilities for two of the four most frequently reported quality measures: (1) more or higher quality staffing and (2) less prevalence of pressure ulcers, sometimes called bedsores.

The results also suggest better performance of nonprofit homes in two other quality measures: less frequent use of physical restraints and fewer noted deficiencies (quality violations) in governmental regulatory assessments.

"The reason patients' quality of care is inferior in for-profit nursing homes is that administrators must spend 10 percent to 15 percent of revenues satisfying shareholders and paying taxes..... For-profit providers cut corners to ensure shareholders achieve their expected return on investment."

Here is what happens when the profit motive drives the delivery of human services

photo courtesy of Sydney Morning Herald

The dangers involved in allowing the the for-profit private and corporate sector to deliver human services to vulnerable people are once again evident in a report More than board and lodging: the need for boarding house reform by the NSW Ombudsman into licensed for- profit boarding houses in NSW.  The Report documents what happens when the profit motive becomes the main driver of the delivery of human services and Governments and the not for profit sector hand over responsibility for service delivery to the private sector..

In NSW boarding houses are run as for- profit private businesses to provide accommodation to people with disabilities, people with alcohol and drug problems. and mental illness. Residents are usually reliant on income support and pay between 75-100% of their benefits to the boarding house for accommodation and consumables

 The Report documents shocking levels of abuse, sexual assault and mistreatment of residents by staff and other residents. The Report demonstrates the complete failure of the Government's licensing and regulation of for- profit and corporate providers.

The Ombudsman's investigation  found that residents have been physically and sexually assaulted by staff and other residents, have died in appalling circumstances, and been denied basic rights, including contact with their families. This is the fourth report in less than 10 years on the failure of the state and the for profit providers to protect boarding house residents, in particular those with psychological and intellectual disabilities.

 Adele Horin's report in the Sydney Morning Herald  describes the conditions:

An estimated 455 private boarding houses operate in NSW with more than 5000 residents, most of them poor and vulnerable. They pay the proprietor 75 per cent to 100 per cent of their pension. Thirty-one of the boarding houses are licensed by the government to accommodate 687 residents with mental illness and/or intellectual disabilities. They must comply with conditions set out in legislation.

The report, More than board and lodging: the need for boarding house reform, shows the level of care for boarding house residents is inferior to that received by people with similar conditions in housing run or funded by the government.

For example, in 2008, a resident was found 12 hours after he had died in a room strewn with faeces and toilet paper. Three months earlier, hospital staff had raised concerns about his hygiene and nutrition. Around the time of his death, the department had assured the Ombudsman of its initiatives to improve monitoring and compliance at the boarding house. The boarding house eventually closed due to ''unrelated factors''.
Another case involved two residents aged over 80 with schizophrenia, who lived in a licensed boarding house despite having been assessed as needing nursing home care.

Jan Daisley, president of People with Disability Australia, said: "It is abhorrent that people with disability are left to deteriorate and die in these places while all along paying up to 100 per cent of their income to live in this form of housing''.

The Ombudsman, Bruce Barbour, noted the good work of some proprietors but said resident welfare should not depend on the ''goodwill and favour of individual proprietors.''

 Dr Gabrielle Drake, a researcher and lecturer from the UWS School of Social Sciences who completed a PhD study in 2010 on the deinstitutionalisation of boarding houses for people with mental illness and disability. has long called for the closure of the boarding houses.

Dr Drake says many of the current licensed boarding houses came about as a part of the poorly resourced and poorly coordinated deinstitutionalisation process.

"The result of this process is that people use the majority of their pension to live in boarding houses which are located in the community, yet they still have restricted access to that community and are still denied their right to self-determination," says Dr Drake.

"These homes are effectively still institutions, where the residents must conform to structured meal times, closed kitchens, and a lack of coordinated health care and planning. Too many also experience abuse, sexual assault, fear and intimidation."

Dr Drake says licensed boarding houses are an archaic approach to service provision for people with a mental illness and disability.

"The Ombudsman's Report clearly indicates that the NSW Department of Ageing, Disability and Home Care's (ADHC) procedure for monitoring the conditions in boarding houses has been unacceptable," she says.

"While I support legislative reform and the need for a cross-agency and partnership approach, at the heart of this debate needs to be the realisation that people with disability have the right to live and participate in the community in non-congregate accommodation."

"Counterfeit" communties and the commodification of community

The adverts appear everywhere. Developers adverting their ritzy housing estates claiming that they don't build houses, they build communities. And property developers employ community development specialists to create "communities" in order to sell more houses at higher prices.

And then there are the Government departments and NGO's who describe their top down efforts to impose solutions on people to achieve already defined outcomes  as "community development".

Frankly it is all an illusion.

It is as Australian blogger and writer Bruce Watson rightly points out the commodification of community-  the turning of a complex human and social institution into a commodity that can be exploited for profit and political gain. Watson reminds us that most of what takes place under the banner of "community" has become clouded and easily manipulated for commodification and marketing.

John Freie and  Bruce Watson call it "counterfeit communities" and it is a good description. In counterfeit communities it is less important that communities exist in reality. It is the appearance of community that is important. People are encouraged to see the manifestations and spirit of community without accepting the complex interactions that must occur for it to be realized. As Wilson writes:

"Community has regrettably become a product to be advertised, marketed and sold. It makes no difference whether genuine community exists or not. As long as it appears to exist. Consequently, we are subjected to planned communities that are advertised as “truly a special place”, “we’ve made the dream a reality” and “the tasteful community you deserve” with a “neighbourhood bar and grill” (in the multi-story shopping centre complex)"

As Watson points counterfeit communities, despite all the glossy brochures, promises and hyperbole, are inherently hollow and exploitative. They are never fully satisfying.

And Wilson gets to the nub of counterfeit community:

"Counterfeit community extends the power and expands the wealth of those who create it".

Business can learn more from not- for- profits than not- for- profits can learn from business

I have long been a critic of those who argue that not-for-profit and civil society organisations should become "more businesslike" and operate more like business and remodel themselves along business and market lines. It is in my view a ludicrous and dangerous claim.

The claim reflects a naive understanding of not-for-profit  organizations and is predicated on a false assumption that not for profits are run by well intentioned amateurs who need a dose of "business thinking" to be more effective and effective. My view has always been that the reverse is in fact true.

Business and corporations would in fact benefit more from the values, principles and practices of many not-for profit and civil society organizations.

So I was interested in this piece by Debra Allcock Tyler ( Director of the UK Based Directory for Social Change) which appeared in the UK Third Sector News.

Charities are good at what they do, and business should learn from us

By Debra Allcock Taylor

Nick Hurd's recent assertion that charities should learn from businesses is the wrong way round, says our columnist.

I like and respect Nick Hurd, the Minister for Civil Society. I really do. But I find myself in the grip of an overwhelming desire to bash him over the head with a copy of the Charities Act 2006 after his recent remarks in this magazine. He said: "The sector has to open its mind to absorbing skills from the private sector because it clearly needs more business skills."

Have people forgotten the recent financial crises already? Maybe I wasn't paying attention, but I don't think it was expenditure on grants for charity bodies that brought the world's financial markets to its knees, was it? Was the banks' decision to extend credit to a sub-prime market a good business decision, or just greed? Was it good business to have the hedge funds underpinning so much of the financial economy?


It is estimated that, at the height of the financial crisis, about 95 firms in the UK were going bankrupt every day, some 20 per cent more than during the 1990s recession.

With the coalition government opening up the public services to competition and private providers to a much greater extent than any of its predecessors, one can't help but wonder if business models really are the most appropriate mechanism.

This culture of commoditising social needs - characterising our needy citizens as consumers of a public sector product - is, I think, dangerous. Vulnerable people aren't consumers. They're vulnerable people. And we are really skilled at helping them.

So why do people who don't run charities keep telling us how to do it? What precisely are these business skills that we apparently need? The ability to deliver excellent services to vulnerable people on tuppence ha'penny? The ability to convince people to give of their time and money for no other reason than it's the right thing to do?

There are probably some badly run charities, of course, but in my experience they are the exception rather than the rule.

So I have to ask, what is this constant exhortation to ape the private sector really all about? Is this just a euphemism for becoming inappropriately competitive; focusing on revenue rather than cause and becoming bigger, because that's what drives companies?

Forgive the sexism, but it's a bit of a macho paradigm, isn't it? It's the size that counts? Well, I don't think it's about how big you are or how much cash you flash. It's about being good at what you do.
Bulldog Rescue & Rehoming survives on less than £25k a year and does what it says on the tin: a wonderful job with an army of volunteers who simply care about what they do. It doesn't need to become Bulldog and Budgerigar Rescue & Rehoming.

Be open to new ideas and ways of working. But charities - I beg you, ignore those calls to be more like businesses. You're absolutely great at what you do when you remember you're charities. Frankly, I think business has more to learn from you.

Managerialism as a prevailing ideology in the not- for- profit sector

image courtesy of Steve Blizzard

This important piece by Vern Hughes, Director of the Centre for Civil Society first appeared in the Sydney Morning Herald on February 4 2011.

Australia's voluntary, charitable and community organisations have changed over the past three decades, almost beyond recognition. Such transformation of the non-profit sector has attracted little public debate.

 Many organisations that began life as voluntary associations have become corporatised instruments of government service delivery and no longer need, or even want, volunteers. Those that still have a place for volunteers are often trapped in a web of regulations and risk-management protocols that reduce volunteering to narrow, mechanistic and unsatisfying tasks.

Most found it easier to seek and obtain public contracts for their operations and to tailor their mission to the delivery of these contracts, than to rely on private fund-raising or commercial income generation.

In the process, their programs and operations came to reflect the silo structure of government, and their internal cultures mirrored the government's risk-averse culture. They became accountable, not to their clients or founders, but to their funding departments.

A generation of non-profit managers rose to ride this service-delivery train, replacing their organisations' once colourful and idiosyncratic cultures with a bland managerialism.

The result is a third sector in deep confusion, torn between its voluntary heritage and its managerialism. Most organisations with a history of more than three decades are unrecognisable from the groups that formed in church halls and around kitchen tables in a previous era.

Disability service organisations are a case in point. Most of the disability agencies now headed by chief executive officers, complete with a raft of risk-management, regulatory-compliance and brand-protection policies, were formed by parents of people with disabilities. These parents knew they needed to create, from scratch, the supports and services required by their sons and daughters.
They usually began around a kitchen table. Everyone was a volunteer. Consultants were unheard of. The only resources on tap were goodwill and a willingness to work together for no reward apart from securing something in the future for their loved ones.

Today many such parents find themselves referred to, in the annual reports of the bodies they created, as ''stakeholders'' in the welfare of their sons and daughters. They appear alongside key stakeholders such local governments, suppliers and corporate partners. Many shake their heads in disbelief at the entity they unknowingly created. ''We gave birth to a monster,'' some say.

Managerialism - in public, private and community sectors - is the prevailing ideology of our time. It has trumped entrepreneurship in the private sector, and perverted notions of service in the public sector. But in the non-profit sector it has swept all before it.

The dominance of big powerful NGOs

Despite their rhetoric about the importance of the not-for profit, non-government sector, the reality is that Federal and State Government policy and funding is predominately biased towards large corporate and business oriented NGO's. 

When it comes to shaping public policy, attracting public funding or winning large contracts there is an inherent bias towards larger more influential NGO's and to certain powerful service provider interests.

As Gavin Mooney points out, in the health sector it is always the  interests and the voice of the medical profession and the powerful bodies that represent them, who dominate public policy making and shape funding distribution. Mooney points out that in current debates about the direction of primary health care policy in Australia, smaller community based health NGO's, such as the Aboriginal community controlled health sector, which has strong links into Aboriginal communities and represents and advocates for Aboriginal people, are being marginalized

This piece appeared in Crikey and we acknowledge Crikey as the source.

Are Medicare Locals Entrenching Institutional Racism

by Gavin Mooney*

A few years ago, together with two Aboriginal colleagues, I wrote about institutional racism in the Australian health care system.

In the last few months, reading some of the documentation around on the new Medicare Locals (or Primary Health Care Organisations -- PHCOs) from the Department of Health and Aging, the Minister and the Australian General Practice Network (AGPN), it is evident that today such institutional racism is alive and well.

Indeed it is being built into the future of these PHCOs. In the current discussions on primary health care for the future in this country, the Aboriginal community controlled sector and its voice are being ignored.

The concern of that sector at not being invited to be engaged adequately in deliberations about the PHCOs is reflected in a recent media release here in the west from the Aboriginal Health Council of WA. That states, for example: "We are alarmed that there has been so little effort made by the minister and the Divisions of General Practice to involve our sector."

I do not think this is sour grapes on their part. I share that view. The views of the Aboriginal community controlled sector are not being sought and not being heard by the Minister, by the department or by the AGPN.

The reason? The new PHCOs are being seen as just bigger if fewer GP Divisions, with a few bells and whistles (which have been forced to be?) added on. This is reflected in the fact that all 15 of the new PHCOs are to be GP Divisions-based and according to the recent discussion paper from the department on Medicare Locals the rest will be "largely" Divisions-based.

In her speech to the APGN Forum in Perth 10 days ago this Divisions-focus was confirmed by the Minister.

As one example (but there are many) in that speech, she stated that her department was engaging consultants "to develop a funding formula that will enable funding for Medicare Locals to be fairly distributed, taking into account the needs of different parts of Australia".

According to the Minister the only body that the government will consult "before finalising the funding formula" is … the AGPN! No others seemingly and certainly no mention of consulting the Aboriginal community controlled sector on this funding formula.

But then, as the funding formula, according to the Minister, is to take into account only differences geographically ("the needs of different parts of Australia") and there is no mention of the differing cultural needs of Australians, such as the special cultural needs of Aboriginal Australians, then maybe she feels no need to run the funding formula past the community controlled sector.

The discussion document is similarly neglectful of the community controlled sector.

Yes, it lists that sector as one of several with appropriate "skill-sets" that "complement those offered by the Divisions of General Practice Network". But where is the recognition beyond "skill-sets" of the need to embrace the cultural base of the community controlled sector? Where is the acknowledgment that AMSs already often have the breadth of primary care that Divisions currently lack and which PHCOs are being asked to embrace?

It is noteworthy that the AGPN has set out some good principles, including on equity and on Aboriginal health, in its ‘blueprint document’ on PHCOs.

It is most unfortunate, however, that when AGPN comes to the operational end of things, as in its paper on a framework for PHCOs, both equity and Aboriginal issues are sadly neglected. When push comes to shove, the principles in the AGPN blueprint document thus turn out to be empty rhetoric.

There is still time for Minister Roxon and for AGPN to think again.

There remains a wonderful opportunity to build an exciting, fair and inclusive primary care sector in Australia. This needs to start with the idea of caring for patients and their health, sharing the vision with all relevant parties, including the Aboriginal community controlled sector, and embracing more firmly both equity and the social determinants of health.

Indeed I’d like to switch the letters round and have PHCOs become COPHs -- Caring Organisations for People’s Health, even if not in name at least in principle and practice.

I suspect that is what Australian citizens want. It is just a pity they are not being asked.

*Gavin Mooney is a health economist with an honorary appointment at the University of Sydney

A view from within the WA human services sector: Critique by an experienced manager

"The dominant story is of a corporatised, economics-driven sector, where leaders are promoted on their ability to run businesses that happen to be charities"

Lucy Morris

Just been reading Lucy Morris's excellent article The Economics of Charity: Who Cares  in the Australian journal Third Sector Review.  Lucy is an academic at the Notre Dame University in Fremantle and an experienced CEO in the human services sector in Western Australia. Her critique is even more important because it is made by an experienced and long serving manager in the human services industry in this state.

Lucy's piece is an important and scathing critique of the dominant pro market (neoliberal) policy agenda that has dominated public policy making for the human services and not- for- profit sector in Australia over the last two decades.

Market driven policies have fundamentally transformed the human services sector and contributed to many of the problems that the sector now faces. For example, Lucy Morris shows how the application of market led, neoliberal policies combined with the gendered nature of the human services workforce and the sector's religious, social and ethical underpinnings have created oppressive employment practices. 

Furthermore, she argues that these market led approaches have transformed and repackaged service users into "consumers" and created hierarchies of need which disadvantage the vulnerable and the most needy. The consequence is often care that is illusory and discriminatory. Morris sees that these market led approaches have distanced managers from service recipients who have become dehumanized, scapegoated and objectified.

Morris writes that increasingly not- for- profits are economically pressured to seek clients that bring in money and don't require intensive support. Governments seek to drive down the price of services to the most vulnerable and needy (the uneconomic clients). So agencies are continually under pressure to get large client numbers and to chase more contracts.  The difference between the business/corporate sector and the not-for-profit sector has become less clear.

Her argument is that these market led and corporatised approaches have largely benefited governments, the funding body or business, rather than improved the quality of care and the lives of service recipients.

Morris is no less critical of managers in the human services sector:

"Charitable corporate governance discussions are focused on strategic planning, financial projections, bottom line decisions, returns on investments and tax breaks. Large charities employ corporate minded CEO's and staff, whose salaries soak up surpluses that used to sustain non-profitable client services. These costs are accepted because CEO's promise to update, professionalise and make the charity more accountable, as it is portrayed as needing economic and governance makeovers. These assumptions seem unquestioned"

In my view Morris is spot on. Hers is an important and accurate critique. I share her concerns and have argued for many  years that the market- led and business approaches imposed on and adopted by the human services and not- for profit sector are a major cause of the fundamental crises that affect many parts of the industry.

What is particularly troubling is that so many in the sector hope that the implementation of the recommendations of the Barnett Government's Economic Audit Committee Report will be the solution. But it is shaped by and reflects the same discredited market led and corporate/business  ideology.The EAC report has just cleverly repacked that ideology into a more acceptable and attractive package- that of social enterprise, enterprising not- for- profits and citizen driven services.

Why not-for-profits should be wary of corporate social responsibility

This great piece by Russell Mokhiber from Corporate Crime Reporter  shows why not-for-profits should be wary of any involvement in corporate social responsibility initiatives. Frankly, they are being used.

As Mokhiber (and many other writers have shown) corporate social responsibility is not just an oxymoron but a sham:

"Corporate social responsibility has been used by companies to ward off both the activists and to reduce the probability of more onerous government regulation,"

"And companies pretend to be socially responsible, but they really don't do very much. This keeps the activists at bay. And it might serve to keep government regulators at bay by saying - see, we are doing it on our own."

Michael Edwards: the danger of business approaches in the not-for-profit and civil society sector

"No lasting change has been successful without large numbers of people acting consciously and collectively around human values of solidarity and social justice, not market values. Markets are great ways to do some things, but not to fashion communities of caring and compassion"
Michael Edwards Small Change: Why Business Won't Save the World.

It has become tiresome to hear the cliche that not-for-profit and civil society organisations should become "more businesslike", that they should operate more like business and be remodeled along business and market lines. Frankly, it is a ludicrous and dangerous claim.

Most times it reflects a naive understanding of not-for-profit and civil society organizations and is predicated on the false assumption that such organizations are run by well intentioned amateurs who need a dose of "business thinking" to be more effective and effective. My view has always been that the reverse is in fact true. Business and corporations would in fact benefit more from the values, principles and practices of many not-for profit and civil society organizations.

In his new book Small Change: Why Business Won't Save the World Michael Edwards questions the wisdom of applying business and corporate thinking in the world of NGOs and civil society. Michael Edwards's book should be required reading for any one working in the not-for-profit and civil society sector(s). Edwards, who has spent over three decades in the not-for-profit and civil society sectors in the USA, UK, Europe and internationally, has published widely on the sector. His book Civil Society is acknowledged as one of the seminal works on the role of civil society and citizen action in democracy and public life.

Small Change is a wise and radical book that challenges many of the taken for granted assumptions that dominate thinking and practice in the world of not-for-profits and civil society. Edwards argues that business and market thinking has too much influence over not-for-profit organisations and civil society groups.

Edwards rejects the role of markets, business and business thinking as solutions for the social ills of society and the challenges facing the not-for-profit and civil society sector. He contends that civil society and NGO groups must turn away from the lures of the market and business and reassert the importance of independent citizen action. He is deeply skeptical about importing business approaches into the nonprofit sector.

Edwards argues that while market approaches can improve access to goods and services, confronting inequality and injustice head-on requires advocacy and system change.

In this book and an earlier monograph and articles Edwards critiques what he called philanthrocapitalism- the belief that markets and business can create lasting social change and that philanthropy from wealthy individuals and corporate sources that is guided by the values and metrics of the corporate world is a force for positive and just social transformation.

In Australia we see a growing body of powerful and influential philanthrocapitalists who claim to be putting their money to work to achieve socially transformative goals. As Edwards points out what is missing from their work is any genuine systemic change that addresses social injustices and inequities in fundamentally significant ways.

Here are just some of the lessons to take from Edwards masterly work

• Philanthrocapitalism concentrates power in the hands of a few major players, mirroring the very inequities not-for-profits and civil society organizations should be trying to ameliorate. With a vested interest in the status quo it shies away from fundamental change. At most all it can promise is valuable but limited advances: small change.
• Markets and business cannot be fundamentally reformed to serve social purposes in the way that their proponents claim
• What seems inefficient using market and business criteria is essential for the social and political impact of not-for-profits and civil society
• Most business metrics and business practices are at odds with the social goals and social transformation that not-for-profits and civil society organizations aspire to.
• Achieving social transformation and change requires cooperation not competition, collective action rather than just individual effort and support for long term systemic solutions rather than immediate results. Business and business models promise only limited advances in addressing society's inequities and injustices.
• Business and business values are ill equipped and unable to address the core issues of concern to many not-for-profits and civil society groups.
• The adoption and use of business models and market thinking can and does corrupt the core mission, purpose and values of NGOs and civil society.