Competition Policy – an opportunity for increased user choice and improved innovation

CEO Social Justice Blog

The long awaited final report on competition policy headed by economist Ian Harper was handed down during the last week of March 2015.

Professor Harper and his committee clearly believe that national prosperity and productivity will be increased by eliminating anti competition barriers, excessive regulations, featherbedding (over staffing) and cartels (e.g. taxi industry).

The committee believes that extending and deepening competition policy in human services is a priority reform. They claim that small gains in productivity (driven by competition) in this growing sector have the potential to deliver large gains across the community. Also establishing choice and contestability in government funded services can lead to significant improvement. If managed well, this can empower service users and improve productivity at the same time.

Their particular recommendations for human services are that:

  • User choice would be placed at the heart of service delivery
  • Government should separate out funding, regulation and service delivery functions
  • Government funding should have a clear focus on outcomes
  • Diversity of providers (including for profit) should be encouraged, while taking care not to crowd out community and volunteer services
  • Innovation in service delivery should be stimulated whilst ensuring minimum standards and access.

I am assuming our Federal / State governments will embrace these recommendations.

Opposition from the non-profit sector is more likely to come from smaller community based agencies rather than the larger national / international groups.

The critics of competition policy in our sector are concerned that not all services are ‘transactional’ with a clear outcome to be achieved (e.g. a hip replacement).

The more relational approach of a community service organisation which can offer continuity of service and well-earned trust could be lost.

A more relational approach is needed for an effective service in areas such as leaving state care or prison, young people living with mental illness or domestic violence issues, refugees or Aboriginal communities. ‘Services are at their best when they comprise longstanding and sophisticated networks, made up of people, places and institutions that are grounded in relationships of trust’ (Jesuit Social Services).

At Samaritans we are encouraged that the Harper committee supports the view that service users (rather than government or provider) are usually best placed to make appropriate choices about the human services they need.

Our concern is that the push for efficiency may detract from service quality.

The increasing role of the for profit sector, particularly in the NDIS will lead to changes but not to the extent as in the UK. In Australia, government and NGOs have a well established partnership and all governments seem to want this to continue.

In reality, as the report states, we already have for profits operating in some human service markets in Australia:

  • Private hospitals service about 40% of hospital in-patients
  • G.P. Allied Health and Dental services are largely delivered by the for profit sector
  • In child care, some 70% of long day care is provided by the for profit sector
  • The private for profit sector provides 36% of residential aged care
  • Private prisons hold around 18% of prisoners in Australia

In summary, the major benefits of a deepening competition policy in the human services sector appears to be increased consumer choice and improved innovation as service users set the agenda rather than service funders or providers. The weakness or dangers are an over emphasis on financial outcomes as has happened in the Job Network and a breakdown in agency collaboration as our service providers turn themselves into competitors rather than partners in community development.