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.

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 ** 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.

Gerry Georgatos and the power of combining citizen journalism and social justice campaigning

Gerry Georgatos is a West Australian journalist who combines investigative reporting with a powerful commitment  to campaigning on social justice and human rights issues.

Gerry is  a Western Australian based reporter for the National Indigenous Times for whom he writes important stories about Indigenous and social justice issues that few other journalists are willing to cover.

Gerry is also the Principal and Convener of the Human Rights Alliance through which he has initiated  and led groundbreaking social justice campaigns in WA. Gerry is also a Phd researcher  on Aboriginal Deaths in custody.

It is this combination of investigative journalism, social and political research and social justice campaigning that has resulted in Gerry exposing injustices ignored by the mainstream media and politicians, including the illegal imprisonment of Indonesian youths in adult prisons in WA, Police violence inflicted on a young Aboriginal man in Albany and the appalling state of Aboriginal homelessness in the Kimberley region.

As well as the National Indigenous Gerry's articles also appear in many other places including Indy Media, Indy Media Brisbane, Green Left Weekly and the Donnybrook-Bridgetown Mail.

Gerry's article below is about the decision by the UK multinational corporation Serco and the WA Department of Corrective Services to deny Aboriginal prisoners access to prisoner transport to attend family funerals. 

The article will appear in the National Indigenous Times this week. 

Gerry Georgatos on Aboriginal Funeral outrage

The National Indigenous Times has been contacted by two sources during the last couple of weeks, one within the Department of Corrective Services (DCS) Western Australia and another within SERCO, that Aboriginal inmates will no longer be transported to funerals. Instead they may be left with the option of paying their respects to loved ones by either viewing a recorded or where possible live screening of the funeral and the procession while alone in a prison wing room. This has been slammed as inhumane, and culturally inappopriate by most Aboriginal Elders.

Both sources said that this initiative was flagged allegedly due to SERCO's reluctance to transport prisoners to funerals. The multinational which has the contract to much of the State's prisoner transport, and manages Acacia Prison, on the outskirts of Perth, and the lucrative Immigration Detention Centre network Australia-wide, is allegedly reluctant to provide compulsory funeral attendances for Aboriginal inmates - it has been alleged that SERCO management claimed high prison officer risk issues at funerals and also allegedly cost benefit issues. SERCO is one of the world's wealthiest companies.

The National Indigenous Times contacted the DCS, and its spokesperson Brian Cowie said "Gerry, we will have comment for you next week." 

UWA law student and Nyoongar rights activist Marianne Mackay the former chairperson of the Deaths in Custody WA contacted the National Indigenous Times a few days ago to confirm that she had also been advised that an Aboriginal prisoner was refused transport to a funeral last Friday. "This is a first, it doesn't happen that one of our people is not allowed to attend a funeral. Apparently SERCO refused to transport him and this has stunned us considering how everybody knows how important it is for our people to attend funerals. It attacks our cultural integrity."

SERCO is yet to respond to the National Indigenous Times.

Another Nyoongar rights activist, Iva Jackson-Hayward has responded with a call for the State Government to ensure that the DCS and SERCO ensure Aboriginal inmates do not have their cultural rights eroded. "The DCS and SERCO are dutibound to protect the rights of our people. Aboriginal women and men in prison cannot break their customary duty to attend funerals. It's outrageous what is happening, and it's a human rights abuse. This is all about money, and SERCO trying to make more of it by abusing the rights of our people. It is the Government's duty to pull SERCO into line."

Ms Mackay said the Inspector of Custodial Services, Neil Morgan was contacted on Friday.

The WA Prison Officers Union (WAPOU) said the State Government should scrap SERCO's prisoner transport contract. WAPOU Secretary John Welch made this call following another whistleblower's leaking of serious allegations.

The whistleblower said SERCO transported prisoners to wrong prisons, was late in bringing prisoners to their Court appearances, transported seriously ill prisoners in prison vans instead of ambulances. It was only a couple of months ago a prisoner who had open-heart surgery was returned to the prison in a van instead of an ambulance and arrived with serious injuries which the DCS tried to play down however CCTV footage proved otherwise.

All three whistleblowers said SERCO was not turning up to transport Aboriginal prisoners to family funerals, and that SERCO made no effort to account for its failure.

Mr Welch said SERCO's failure to ensure contracted prisoner transports gave rise to stress and tensions in prisons.

"These latest allegations are so serious that the Barnett Government should cancel SERCO's contract and bring these services back for the Department of Corrective Services to run so that we can be confident the community is being kept safe."

Australia has one of the world's worst prison suicide rates, with privately run prisons, according to the Australian Institute of Criminology, enduring proportionately more deaths in custody than Government run prisons.

Other serious allegations were made by the whisteblowers to the National Indigenous Times and we will follow these through.

Why privatization and corporate delivery of human and communty services to vulnerable people should be opposed

It is, instead, almost surely a glimpse of a pervasive and growing reality, of a corrupt nexus of privatization and patronage that is undermining government across much of our nation.
Paul Krugman

When a market liberal like Paul Krugman writes in a mainstream US newspaper about the horrors resulting from the privatization of human services to corporate and for profit providers it is more evidence that the privatization of public functions and the corporate delivery of  human and community services to vulnerable and marginalised people must be opposed.

Krugman's piece focuses on an investigation by the The New York Times about New Jersey’s system of halfway houses — privately run adjuncts to the regular system of prisons.  Krugman writes that the horrors described in the New York Times piece are not an isolated example but part of a broader pattern in which essential functions of government are being both privatized and degraded. 
Krugman also highlights how the privatization of public functions is built upon powerful networks and connections between politicians, elected offocials, lobbyits and the corporations who win the contracts.

Krugman writes:

"... the Times’s reports instead portray something closer to hell on earth — an understaffed, poorly run system, with a demoralized work force, from which the most dangerous individuals often escape to wreak havoc, while relatively mild offenders face terror and abuse at the hands of other inmates.

It’s a terrible story. But, as I said, you really need to see it in the broader context of a nationwide drive on the part of America’s right to privatize government functions, very much including the operation of prisons. What’s behind this drive?

       

You might be tempted to say that it reflects conservative belief in the magic of the marketplace, in the superiority of free-market competition over government planning. And that’s certainly the way right-wing politicians like to frame the issue......

So what’s really behind the drive to privatize prisons, and just about everything else?

      

One answer is that privatization can serve as a stealth form of government borrowing, in which governments avoid recording upfront expenses (or even raise money by selling existing facilities) while raising their long-run costs in ways taxpayers can’t see. We hear a lot about the hidden debts that states have incurred in the form of pension liabilities; we don’t hear much about the hidden debts now being accumulated in the form of long-term contracts with private companies hired to operate prisons, schools and more.

      

Another answer is that privatization is a way of getting rid of public employees, who do have a habit of unionizing and tend to lean Democratic in any case.

      

But the main answer, surely, is to follow the money. Never mind what privatization does or doesn’t do to state budgets; think instead of what it does for both the campaign coffers and the personal finances of politicians and their friends. As more and more government functions get privatized, states become pay-to-play paradises, in which both political contributions and contracts for friends and relatives become a quid pro quo for getting government business. Are the corporations capturing the politicians, or the politicians capturing the corporations? Does it matter?

       

Now, someone will surely point out that nonprivatized government has its own problems of undue influence, that prison guards and teachers’ unions also have political clout, and this clout sometimes distorts public policy. Fair enough. But such influence tends to be relatively transparent. Everyone knows about those arguably excessive public pensions; it took an investigation by The Times over several months to bring the account of New Jersey’s halfway-house-hell to light.

       

The point, then, is that you shouldn’t imagine that what The Times discovered about prison privatization in New Jersey is an isolated instance of bad behavior. It is, instead, almost surely a glimpse of a pervasive and growing reality, of a corrupt nexus of privatization and patronage that is undermining government across much of our nation.

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."