The trend towards outsourcing has eroded public sector capability, leading to poor outcomes for some of Australia’s most vulnerable, argues a report from the Centre for Policy Development.
The blurred lines of accountability created by the outsourcing of public services has led to the emergence of “grand alibis” where no single organisation can be held responsible for service failures.
Despite outsourcing having been used extensively in Australia for a long period, it has failed to meet expectations. The report explains:
“Outsourcing emerged to combat systemic difficulties and dissatisfaction within government circles with direct public service provision. The objective was to create a market for service delivery and achieve better, more efficient, and more flexible services, expanding the role for non-profit and for-profit service providers.
“But despite the promise offered, the results are heavily contested. Across human services there has been a continued failure to deliver lasting outcomes for the most disadvantaged.”
Grand Alibis: how declining public sector capability affects services for the disadvantaged, by Kelly Farrow, Sam Hurley and Robert Sturrock, calls on government to ensure outsourcing passes a net public impact test to make sure lowering costs do not mean lowering service quality.
Their findings are based on interviews and roundtables with experts from Commonwealth and state departments, academics, corporate consultants, public sector unions and representatives of the not-for-profit and commercial community services sectors.
The report is the latest in a line of calls to reconsider outsourcing by default, with Laura Tingle’s Quarterly Essay Political Amnesia most recently arguing that widespread outsourcing over a long period has contributed to a loss of institutional memory from the bureaucracy.
Putting the direct costs of outsourcing to one side — and sometimes outsourcing results in higher direct costs, though it’s typically introduced as a savings measure — putting service delivery outside of government can lead to “strategic costs” such as the loss of core competencies and public trust in the public sector, the CPD authors believe.
The reorientation of the public sector skills base towards contract and market management, rather than delivering services, “has become a self-perpetuating cycle that crowds out other service models from emerging”, they argue. The shrunken bureaucracy has lost the ability to be a plausible delivery agent, leaving outsourcing as the default solution.
This could be tackled by resourcing public sector agencies adequately to build capability “to act as effective, persistent policy entrepreneurs, including by trialling different service models, with the skills and staff to develop the evidence and analytics base on an ongoing basis.”
Government audit offices should review confidentiality clauses in human service contracts before execution and independent reviews of public sector capability should be undertaken across the public service, argues the think tank. There is also a need to develop the evidence base on what works in outsourcing.
The report highlights the National Disability Insurance Scheme and corrective services as two policy areas where problematic delivery models threaten to ingrain poor outcomes for some of the country’s most vulnerable.
CPD’s CEO Travers McLeod says Australians want results from public services, not alibis, but the trend over decades towards outsourcing human services to external providers has had unintended impacts particularly for the most disadvantaged Australians. McLeod argues employment services are a clear example of outsourcing’s pitfalls:
“These services have been outsourced for almost 20 years, but better results for disadvantaged jobseekers remain elusive and public sector capability has been run down.
“Governments are ultimately held accountable for outsourced services, and people expect a public sector with the right experience, skills and policies to best serve their community. Nobody wins if public servants are reduced to contract managers.”
Commissioning ‘misapplied’
The report also gives voice to concerns that commissioning is used by many as a repackaged version of outsourcing, arguing that “the fact that the language of commissioning has often been closely linked with a perceived presumption towards non-government delivery highlights that even with the best intentions, there is a risk that this framework will be misapplied in practice”. The report continues:
“Failure to draw on the potential strengths of a properly-applied ‘commissioning’ approach would represent a missed opportunity. There is much to be gained from a more strategic, integrated and long-term service design and implementation discipline that draws heavily on program evaluation, ongoing service planning and cross-sector data, and emphasises the public sector capabilities needed to make this a reality. CPD’s roundtable showed appetite for a commissioning approach, if it could be assured that it did not import certain ideological claims, and did not presuppose a delivery agent.
“However there is currently no transparently posited or universally applied framework for commissioning services to which advocates can point. It is CPD’s view that a commissioning framework should be developed amongst key agencies in state and Commonwealth governments, to ensure the benefits of commissioning are realised, but not at the expense of workforce capability and existing service delivery expertise.”
