Challenging market orthodoxy: the economic lessons of Elinor Ostrom

It is time that those of us concerned about social and economic justice and the role of the NFP sector and civil society start developing serious policy alternatives to the market driven policies that are being imposed in social policy and the delivery of social and community services.

Three years after her death in 2012 the work of  Elinor Ostrom remains more relevant than ever for those of us campaigning for alternatives to the contemporary orthodoxy of market fundamentalism and neoliberalism that has colonized large parts of the not-for-profit and civil society sectors.

 

 Ostrom who was a Professor at Indiana University was the first woman to be awarded the Nobel Prize for Economic Sciences in 2009.

Ostrom's work challenged and rebutted fundamental economic beliefs, particularly free market and neo-classical economic paradigms. Ostrom was particularly concerned with  relational aspects of economic activity — the ways in which people interact and negotiate with each other to forge rules and informal social understandings.

Ostrom's early work focused on what she called co-production.

 

Ostrom argued that many public services depend heavily on the contribution of time and effort by the persons who consume these services, i.e. the clients and citizens.

 

Ostrom believed that services rely as much upon the unacknowledged knowledge, assets and efforts of service ‘users’ as the expertise of professional providers. It was the informal understanding of local communities and the on the ground relationships that make services more effective.

Co-production describes the relationship that exist between ‘regular producers’, like health workers, police, and schoolteachers and their ‘clients’ who may be transformed by the services into safer, better educated and/or healthier persons.

Ostrom defined co-production as

 “…the mix of activities that both public service agents and citizens contribute to the provision of public services. The former are involved as professionals, or ‘regular producers’, while ‘citizen production’ is based on voluntary efforts by individuals and groups to enhance the quality and/or quantity of the services they use”

One implication is that privatization of public services and the turning over of services to the market fundamentally transforms the relationship between provider and service user, hampering the development of co-production and democratic governance.

Her later work examined how people and communities collaborate and organize themselves to manage collective shared resources like forests, fisheries and natural and social resources. The research overturned the conventional wisdom about government regulation  and challenged the idea that private ownership of public resources is better and more effective than the public and collective sphere.

Ostrom's work provides clear evidence  that the commons-based traditions of cooperation and communal management of resources is not a violation of basic economic common sense.

Her work undermines political conservatives and mainstream economists who denigrate collectively managed property and government and who argue that only private property and the "free market" can responsibly manage resources.  Her work also directly challenges current ideas that privatization and private ownership and expert management of resources is a more effective strategy than collective and public management

Ostrom advocated a “polycentric” approach to managing shared or common resources involving oversight “at multiple levels with autonomy at each level. She argued that shared management of resources helps to establish rules that “tend to encourage the growth of trust and reciprocity” among people who use and care for a particular commons.

Ostrim argued that key management decisions should be made as close to the scene of events and the people and groups involved as possible. Her work showed that the people most affected by or with a stake in shared or common resources are the ones best able to collaborate to use and manage those shared resources effectively and sustainably.

Her work demonstrates that ordinary people are able to create rules, institutions and systems that ensure the equitable and sustainable management of shared and common resources, what is often called our 'common wealth'.

She demonstrated the importance of shared (collective) rather than expert or private management of resources and knowledge and emphasises the importance of active citizen participation. She cited a comprehensive study of 100 forests in 14 countries that detailed how the involvement of local people in decision making is more important to successfully sustaining healthy forests than who is actually in charge of the forests.

 David Bollier writes of the significance of Ostrom's work:

In the 1970s, economics was quickly veering into a kind of religious fundamentalism. It was a discipline obsessed with “rational individualism,” private property rights and markets even though the universe of meaningful human activity is much broader and complex. Lin Ostrom pioneered a different, more humanistic way of thinking about “the economy” and resource management. She originally focused on property rights and “common-pool resources,” collective resources over which no one has private property rights or exclusive control, such as fishers, grazing lands and groundwater. This work later evolved into a broader study of the commons as a rich, cross-cultural socio-ecological paradigm. Working within the social sciences, Ostrom proceeded to build a new school of thought within the standard economic narrative while extending it in vital ways.

 Ostrom's work also has direct relevance to the current economic and environment crises. She wrote:

"We cannot rely on singular global policies to solve the problem of managing our common resources: the oceans, atmosphere, forests, waterways, and rich diversity of life that combine to create the right conditions for life, including seven billion humans, to thrive.....Success will hinge on developing many overlapping policies to achieve the goals,.......We have a decade to act before the economic cost of current viable solutions becomes too high. Without action, we risk catastrophic and perhaps irreversible changes to our life-support system.”

Articles written in memory of her work are here, here, here and here.

A reading list of her work is here.

The last article she wrote before she died is here

Her last book, published just before her death was titled Working Together: Collective Action, the Commons, and Multiple Methods in Practice, and describes the advantages of using several different research methods to study a problem.

The Abbott Government, social policy and the greedy ghost of market fundamentalism

Treasurer Joe Hockey's announcement that the Abbott Government plans to increase the pension age (from 67 to 70), impose more welfare means testing and introduce co-payments for medical services comes as no surprise, but provides more evidence of the continuing assault on public spending for the less well off, the vulnerable and disadvantaged.

The Abbott Government has already imposed severe spending cuts across many portfolios and shown its intention to cut back public expenditure for the less well off by fundamentally transforming income support in areas such as the Disability Support pension (DSP), family and welfare payments and welfare support for the long term unemployed.

In addition, there is the expectation that both the report into the Welfare System (the McClure Review) and the report of the National Commission of Audit (the Business Council of Australia report), both due to be released soon, will recommend serious austerity policies and market driven social policies.

The Abbott Government's market fundamentalist policies and its austerity agenda are intended to dismantle public spending for the less well off and the vulnerable, and fundamentally transform public spending and public assets to make them suitable to deliver profit to the business and corporate sector and largess to the already well off.

What is also worth noting is that this fundamental transformation of social policy and welfare support is being undertaken without any real consultation with the social policy and welfare sector, and continues to be driven by advice from, and the agendas of influential pro- business and corporate lobby groups, such as the Business Council of Australia.

Moreover, the Abbott  Government has consistently concealed its real social policy intentions and denied it was planning to impose these policies. None of the policies were made public prior to the last election and back in November 2013 Treasurer Joe Hockey lied when he said that the Government had no plans to increase the pension age.

While it dismantles social policies that support the less well off and the vulnerable it retains and expands profligate policies for the corporate and business sector and the rich and already well off, such as superannuation tax concessions, various housing-related tax benefits, paid parental leave, asset tests and corporate tax benefits, to name but a few.

On his blog En Passant former Tax Office economist, blogger, activist and academic John Passant alerts us to the hypocrisy and deceit of Treasurer Joe Hockey's proposals on the age pension:

Let me get this right. The revenue forgone on tax concessions for superannuation at $45 bn will soon be more than the cost of the pension (over $40 bn). Of that $45 bn in tax concessions $10 to $15 bn will go to the top 10% of income earners. Yet Australia’s greatest Treasurer, Joe Hockey, wants to rein in expenditure on the pension by for example extending the access age to 70 (after Labor increased it to 67 over time by 2023) and tightening up the asset test to perhaps include the family home. Priorities. 

According to the OECD Australia has one of the lowest relative pensions of any member countries (Turkey and Mexico are lower) and 35% of Australian pensioners live in poverty. Priorities.

Attacks on the independence of the voluntary sector and civil society

" We are on a slippery slope, where it is becoming increasingly common to hear the view that voluntary organisations should deliver services but not challenge the status quo, especially if they receive government funding. We are already seeing a ‘chilling effect,’ with increasing evidence of self- censorship by voluntary organisations"

Roger Singleton, Chair of the Independence Panel for the UK Voluntary Sector

 The Panel for the Independence of the UK Voluntary sector has just released its 2014 report titled Independence Undervalued: The Voluntary Sector in 2014,  and the picture it paints is despairingly familiar to the situation in Australia:

 "The voluntary sector is losing its ability to protect the most vulnerable in society as a result of government attacks on its campaigning activities, lack of consultation over policy changes, and funding arrangements that put the future of an independent sector at risk"

In its media release the Panel:

• calls on the British Prime Minister David Cameron to take action to stop weakening the independence of the sector and to rebuild trust.  
•  calls on voluntary sector leaders to take a stand to preserve the sector’s independence, which it says is vital to a healthy and compassionate democracy and the reason why so many people lend their support to charities and trust their services.

•  documents numerous instances of a serious and growing threat from the government to Britain’s long tradition of independent voluntary action including:

• Growing criticism by some politicians, including the Secretary of State for Justice, of charities’ role as voices of communities.  There is an increasingly commonly expressed view that charities should simply deliver services and not speak out against injustices – leading to voluntary organisations self-censoring because they are afraid of losing government work, appearing too political or because of gagging clauses in state contracts.
• New and proposed restrictions to the ability of voluntary organisations to challenge government decisions in the courts on behalf of vulnerable individuals.
• Restrictions to campaigning put forward in the Lobbying Bill without consultation and, despite subsequent changes, with continuing concerns about their impact.
• Cuts in government consultation periods, leaving voluntary organisations too little time to respond to important questions, despite assurances this would change.
• Damage to support in communities due to loss of public funding for local specialist voluntary organisations as public service contracts concentrate on economies of scale rather than social return.
• Many state-sponsored charities subject to government interference, for example in appointment of board members.
• A weak Charity Commission ill-equipped to maintain public confidence that charities are pursuing an independent mission that is furthering the public good and not state sponsored or driven by private gain; and lack of government compliance with a document signed by David Cameron to protect the independence of the sector, the Compact.

 Panel chair Sir Roger Singleton CBE said:

“An independent voluntary sector lies at the heart of a compassionate, democratic society, a role that has become especially important as engagement with mainstream politics declines and the state reduces in size. Yet we are on a ‘slippery slope’, in which the independence of voluntary organisations is increasingly undervalued and under threat and there are insufficient safeguards to protect an independent future for the sector. It is increasingly seen either as a delivery arm of the state or only legitimate where it provides services but does not speak out for wider social change.

 The full 64 page report of the Panel is here

The dangers of outcomes based contracting models

As the Barnett Government and the funded not- for- profit sector in Western Australia move to adopt outcomes based contracting models for the delivery of human and community services, the evidence from the UK demonstrates the danger to the sector of such models.

The use of outcomes based contracting models- such as prime or lead contractor models and payment by results models- within the UK Government Work Programme is having devastating impacts for small agencies and disadvantaged service users.

The UK experience is that outcomes based contracting and procurement- in its many forms- results in Governments, or the agents of government, moving public money into bigger contracts and bigger services, which increasingly are awarded to large private and multinational corporations  such as SERCO G4S, A4E, Virgin, Ingeus (There Rein's company) and Capita to name but a few.

The majority of contracts are won by large for profit corporations who claimed that they would sub-contract smaller local not- for- profit providers to deliver tailored specialist services, however this has not happened.

Many of the smaller not- for- profits were used as "bid candy" to enable the corporate providers to tender for and win the contracts and were promised work as sub-contractors. Such work (and income) has not eventuated and even when it has major delays in being paid have severely affected the income and cash flow of small agencies.

The result is that more and more smaller agencies are having to shut down due to cash flow problems and loss of income. And the closure of small agencies with specialist knowledge and expertise and strong local links directly impacts on the most vulnerable and disadvantaged clients.

The Third Sector, an online  publication for the sector reports that:

Eco-Actif Services, a community interest company based in Sutton, south London, and Red Kite Learning, an education and learning charity in Southwark, south London, both closed in July and blamed the government’s move to large-scale payment-by-results contracts.

Lin Gillians, chief executive of the LVSC, said: "Over the past two years, longer, larger contracts for employment programmes have been almost exclusively awarded to large private sector providers.

"The intention was that specialist voluntary and community sector providers would deliver tailored support as subcontractors – however, as time goes on we are seeing this specialist provision disappear.

"This raises enormous concerns about the quality of support available to the thousands of Londoners facing serious or multiple barriers to work."

The homelessness agencies the Single Homeless Project and St Mungo’s have also withdrawn from the Work Programme in recent months, citing problems with the way it is run.

Gillians said: "The government urgently needs to review the impact of this commissioning model on disadvantaged job seekers and special employment providers before more damage is done.

"This isn't about blaming the Work Programme or prime contractors – it's about providing appropriate support to give everyone a fair chance to work."

Brendan Tarring, who founded RKL 25 years ago, said: "The Department for Work and Pensions needs to reassess its one-size-fits-all mentality and acknowledge that individually tailored employment support for vulnerable jobseekers is best delivered by innovative mid-sized charitable organisations."

Service delivery, social enterprise and the transformation of the not- for- profit sector

In this piece from the UK online publication Third Sector Lucy Sweetman asks some important questions about the future of third sector not -for- profit organisations.

Writing about the UK experience, Sweetman suggests that the increasing focus on service delivery and winning contracts to deliver services on behalf of Government, coupled with the uncritical adoption of the rhetoric of social enterprise and business has fundamentally transformed the sector's ethos and purpose.

And Sweetman argues that it is the most disadvantaged and vulnerable, the very people  the sector exists to serve, who are worse off because of these transformations.

The situation she describes in the UK is unfolding here in Western Australia.

Sweetman writes:

I’ve been worried for a long time that the sector’s charities have been drifting too far from their campaigning and fundraising roots and into service delivery. What started out in the sector as an interesting stroll down a path towards the creation of diverse public service partners has opened up into a gigantic free-for-all.

Predictably, the sector is now populated with social enterprises, social businesses, community interest companies and others, all willing to be in receipt of the state’s dollar to deliver our public services. And they are all competing with the charities that paved the way through the Compact.Public service delivery is now a vast and open market.

Ask Serco.

But when the large children and young people’s charities prefer to call themselves ‘social businesses’ in order to compete in this overcrowded marketplace, we move inexorably into territory where charitable purpose becomes meaningless and even undesirable.

For vulnerable and disadvantaged young people this is not good news. As we have seen with the Work Programme, the need to meet targets in order to justify or even receive funding for a service, leads to the people with the most complex needs being ignored. They are those who cannot be ‘resolved’ or moved on quickly and inexpensively.

So if charities stop thinking like charities entirely, who will be there for the most  disadvantaged,  those most in need of the long-term, expensive solutions? And who will take the time to set up and fund the types of projects that have less tangible outcomes, like those devoted to raising young people’s self-esteem or engaging them in the arts?

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.

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.

The gap between Government rhetoric about civil society and the reality

The UK Cameron Coalition Government has made all sorts of policy statements about the importance of civil society and the NFP sector in contributing to the "Big Society", but the sector is being devastated by funding cuts and the privatization and outsourcing of human services and public services to corporations.

A new report publicized in the UK Independent shows that not for profits and charities are set to lose 3 billion pounds in public funding over the next 5 years.

This comes on top of research by False Economy UK, which used freedom of information requests to show that 2,000 charities in England have suffered funding cuts this year and these cuts represent just a small amount of the agencies facing funding cuts.

The gap between the rhetoric of Governments about the importance of the not- for- profit sector and civil society and the reality has never been starker and should serve as a caution to NFP's here in Australia. 

The Independent reports:

"Britain's voluntary organisations face losing almost £3bn in funding over the next five years, according to the first comprehensive report to analyse the coming impact of spending cuts on the public sector.

In a blow to David Cameron's much-trumpeted "Big Society", charities across the UK face the prospect of their funds dropping by £911m a year by 2016, and losing £2.8bn in total over the next five years, according to research by the National Council for Voluntary Organisations (NCVO) published today.

The six-month study, which looked at how cuts to central and local government over the next half decade will hit the voluntary sector, predicts that charities will lose 7.7 per cent of their current public funds by 2016 if government departments pass on their cuts proportionately. Currently, central and local government together contribute at least £11.8bn to charities each year".

Honoring those who work for a better world

French film Director Bertrand Tavernier's  film It All Starts Today  is a beautiful testament to the commitment and humanity of teachers (and other front line workers) who work with families and children suffering the consequences of neo-liberal market  and economic "reform". 

Like Pierre Bourdieu's  book The Weight of the World: Social Suffering in Contemporary Society  Tavernier's film documents the new forms of social suffering that characterize not just French society, but the economies and societies of the western world.

Tavernier's deeply moving film tells the story of a kindergarten teacher in an impoverished region of France struggling to educate children of families devastated by unemployment, grinding poverty, deprivation, depression and economic hardship. These are children whose families are the casualties of neo-liberal market reform and economic and corporate restructuring.

The film shows the heroics and dedication of teachers, education aides, volunteers, health workers and social welfare workers who give themselves fully and devote their lives to improving the well being of the children and families in their care. They do this despite poor pay and appalling conditions, budget cutbacks and hostility, indifference and neglect from elected officials, politicians, some government agencies and workers, business groups and those who hold power.

 In Australia we accord little respect and honor to those front line workers and volunteers who work for a better world. We forget and ignore the teachers, child care workers, teachers aides, carers, aged care and disability workers, social welfare workers, aboriginal health workers, volunteers, family support workers, refuge workers, domestic violence counselors and millions of  other front line welfare and community workers who dedicate themselves to the care and well being of others, and who through their efforts make our society and communities better places.


Instead they are poorly paid and usually berated and stigmatized, labeled as do-gooders and bleeding hearts, or dismissed as rent seeking, vested interests who breed dependency and a welfare mentality in people.

No, in Australia we honor soldiers who fight in imperial wars, celebrities caught in the glare of their own importance, sportsmen who are paid exorbitantly and businessmen and corporations who pursue and accumulate wealth and power at the expense of the common good.

Jim Johnson has taken up a similar theme in a recent post on his excellent blog Notes on Politics, Theory and Biography and I thank him for his insights:

"I find it obsequious and cloying to hear the radio show hosts and politicians offering a "Thank you for your service" whenever they encounter a veteran or military personnel. What about the social workers and parole officers and teachers and, yes, scientists and artists, who work in underpaid professions for years and decades in order to contribute to a better world? After all, they could be out there peddling sub-prime mortgages (or some other form of snake oil) and making real money. When was the last time you heard someone - anyone - publicly thank those folks for their service? No, instead we are taking aim at them (the teachers and parole officers are, after all members of those dastardly public sector unions) in the misguided quest for fiscal responsibility"

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

Welfare for the wealthy and aspirational classes: The revolution of the rich

Jane Caro has written an important article The deserving rich v the undeserving poor in which she contrasts the punitive and paternalistic treatment of welfare recipients with the generous public subsidies gifted to beneficiaries of "middle class welfare", particularly private schools.

The rivers of money flowing to private schools at the expense of public schools exemplifies the political reality that public funding to the middle and wealthy classes is generally non-conditional and ever expanding.

Caro points out that more than half of Australia's private schools receive more public funding than they are entitled to, thanks to deals done between the powerful private school lobby and successive Federal Governments.

Caro writes:

"Unlike the recipients of real welfare, who are policed within an inch of their lives, there is little accountability for the millions handed out to these schools. Justified as supporting parental choice, there is actually no mechanism attached to these subsidies to make sure they have any effect of fees parents pay at all...... If we are serious about not wasting public money, we must simply put a stop to it at the top end of the income scale as well as at the bottom"