The privatisation of Centrelink: a recipe for a bigger disaster than Centrelink already is

 

'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 outright 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.

Learning from the pioneering work of Elinor Ostrom (1933-2012)

 

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.

 

 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.

Greece exemplifies the failure of austerity and the dystopia and suffering caused by the neoliberal elite

On Tuesday the Greek Government announced that it could not — and would not —  transfer a 1.6 billion euro debt repayment to the IMF. And with that Greece officially defaulted on the IMF.

 

The UK Guardian has a live report facility  on the Greek crisis on its website.

Jerome Roos points the finger directly at the IMF and international financial elite who he says are responsible for the Greek economic  and political crises:

"In any civilized country, those responsible for such vast suffering and loss of life would have been sentenced to prison years ago."

In Roar Magazine Roos writes that the IMF and the financial must accept their responsibility for the crises and calls on them to cancel the Greek debt

"The evidence for the IMF’s criminal complicity in the collapse of the Greek economy is simply overwhelming. Yes, the officials at the Fund bear direct responsibility for the years of untold suffering they have inflicted upon millions, including the tens of thousands who died because they could not obtain adequate medical treatment or who, driven to despair by the lack of economic prospects, took their own lives................. In its review of the 2010 bailout, the IMF itself admitted that “in retrospect, the program served as a holding operation” to allow private creditors and domestic elites to escape the crisis without having to share in the burden of adjustment. This can only lead us to one possible conclusion: Greece may have defaulted on the IMF tonight, but the IMF itself defaulted on the Greeks a long, long time ago. It is high time for the creditors to pay their dues and return the immense moral and material debt they owe to the people of Greece".

Bill Mitchell continues to be the best Australian commentator on the Greek Crisis (and economic matters).  Mitchell argues that the Greek crisis is an:

 "overt laboratory for the failures of fiscal austerity and the easy sounding but evil in practice ‘growth friendly structural reforms’ (aka hack as many public benefits from ordinary citizens and transfer as much national income to the rich)"

In an article on his excellent blog Billy Blog  he wrote:

"My header this week is in solidarity for the Greek people. I hope they vote no and then realise that leaving the dysfunctional Eurozone will promise them growth and a return to some prosperity. They can become the banner nation for other crippled Eurozone nations – a guiding light out of the madness that the neo-liberal elites have created. While Greece battens down against the most incredible attack on European democracy since who knows when – perhaps since the Anschluss that led finally to war breaking out a year later in Europe, one wonders how low the Brussels elite will go to preserve control of the agenda."

Phillip Pullman and the "greedy ghost of market fundamentalism"

"there are things above profit, things that profit knows nothing about.. things that stand for civic decency and public respect for imagination and knowledge and the value of simple delight"   Phillip Pullman

This speech by the British novelist and writer Phiilip Pullman describes the 'greedy ghost of market fundamentalism' that haunts the offices, meeting rooms and conference rooms of Governments all over the world. 

Pullman describes how everything that sustains the fabric of a decent society and of communities is destroyed by the onslaught of the market fundamentalists and their acolytes. 

He is right. A great speech.

 "And it always results in victory for one side and defeat for the other. It’s set up to do that. It’s imported the worst excesses of market fundamentalism into the one arena that used to be safe from them, the one part of our public and social life that used to be free of the commercial pressure to win or to lose, to survive or to die, which is the very essence of the religion of the market. 

Like all fundamentalists who get their clammy hands on the levers of political power, the market fanatics are going to kill off every humane, life-enhancing, generous, imaginative and decent corner of our public life. I think that little by little we’re waking up to the truth about the market fanatics and their creed. We’re coming to see that old Karl Marx had his finger on the heart of the matter when he pointed out that the market in the end will destroy everything we know, everything we thought was safe and solid. It is the most powerful solvent known to history. “Everything solid melts into air,” he said. “All that is holy is profaned.”

Market fundamentalism, this madness that’s infected the human race, is like a greedy ghost that haunts the boardrooms and council chambers and committee rooms from which the world is run these days"

Phillip Mirowski: How the neoliberals pulled it off

"What remains of Neoliberalism after the financial crises? The answer must be virtually everything?"

Colin Crouch 

The Strange Non-Death of Neoliberalism

Currently wading my way (slowly) through a library copy of Phillip Mirowski's book Never Let a Serious Crises Got to Waste: How NeoLiberalism Survived the Financial Meltdown.

It is a profoundly important book.  

The book is dense and demanding, full of big and challenging ideas, and written in language that is sometimes difficult to unpack. 

It is also a large book (470 pages, including nearly 100 pages of page notes, references and Bibliography). So my pace is considered and even slow.

Mirowski is a radical historian and philosopher of science, as well as an economist, and his book does not attempt to provide a broad analysis of the causes and consequence of the Great Crash of 2007 and subsequent global depression of 2008-2014.

Rather, he drills down deeper, to undertake an intellectual critique and social, political and economic history of the neoliberal ideas and policies that were at the core of the crises. 

 I am particularly enjoying and appreciating what one reviewer calls his:

relentless exposure and ridiculing of the fallacies, absurdities, and self-contradictions inherent in neoliberalism

Mirowski argues that neoliberal thought (or what others call market fundamentalism) has become so pervasive and ascendant, that any countervailing evidence serves only to convince disciples and supporters of its ultimate truth.

And further, that these neoliberal ideas have come to paralyze large parts of the progressive and radical Left.

A particularly valuable section of the book is his analysis of the underlying logic of neoliberalism, outlined as the 13 commandments of neoliberalism.

Mirowski has published his ideas in Australian online sources, including this article Beyond Denial in the online and print journal Overland, in which he applies his ideas to climate change denialism.

The Thatcher legacy

So former British Prime Minister Margaret Thatcher is dead. 

Like many others I won't be mourning her passing. It is more important to acknowledge and remember all those who suffered because of her policies and all those who resisted and opposed her.

Film Director Ken Loach sums it up well:

"Margaret Thatcher was the most divisive and destructive Prime Minister of modern times, mass unemployment, factory closures, communities destroyed — this is her legacy. She was a fighter and her enemy was the British working class ... How should we honour her? Let's privatize her funeral. Put it out to competitive tender and accept the cheapest bid. It's what she would have wanted."

Writing on the Overland Blog Jeff Sparrow reminds us that we should never forget many of Thatcher's political positions:

How to remember Margaret Thatcher? Shall we recall the friend of Augusto Pinochet, the woman who protested bitterly about the arrest of Chile’s murderous dictator, a man to whom, she said, Britain owed so much? What about the staunch ally of apartheid, the prime minister who labelled the ANC ‘terrorists’ and did everything possible to undermine international action against the racist regime? The anti-union zealot who described striking miners defending their livelihood as an ‘enemy within’, hostile to liberty? The militarist who prosecuted the Falklands war, as vicious as it was pointless? The Cold Warrior, who stood by Reagan’s side, while the US conducted its genocidal counterinsurgencies in Latin America? The British chauvinist who allowed Bobby Sands to slowly starve to death?

Both Jeff Sparrow and Rjurik Davidson writing in Overland reminds us that Thatcher's political legacy is very much alive and grows stronger here in Australia . Davidson makes the connection between Thatchers political and economic agenda and Julie Gillard and the Australian Labor Party's embrace of market fundamentalism.

In his piece Margaret Thatcher and the Misapplied Etiquette  Glenn Greenwald challenges those who demand respectful silence in the wake of a public figure's death, arguing that such silence is not just misguided but dangerous. He writes:

But the key point is this: those who admire the deceased public figure (and their politics) aren't silent at all. They are aggressively exploiting the emotions generated by the person's death to create hagiography. Typifying these highly dubious claims about Thatcher was this (appropriately diplomatic) statement from President Obama: "The world has lost one of the great champions of freedom and liberty, and America has lost a true friend." Those gushing depictions can be quite consequential, as it was for the week-long tidal wave of unbroken reverence that was heaped on Ronald Reagan upon his death, an episode that to this day shapes how Americans view him and the political ideas he symbolized. Demanding that no criticisms be voiced to counter that hagiography is to enable false history and a propagandistic whitewashing of bad acts, distortions that become quickly ossified and then endure by virtue of no opposition and the powerful emotions created by death. 

When a political leader dies, it is irresponsible in the extreme to demand that only praise be permitted but not criticisms. 

Greenwald concludes that:

There's something distinctively creepy about this mandated ritual that our political leaders must be heralded and consecrated as saints upon death. This is accomplished by this baseless moral precept that it is gauche or worse to balance the gushing praise for them upon death with valid criticisms. There is absolutely nothing wrong with loathing Margaret Thatcher or any other person with political influence and power based upon perceived bad acts, and that doesn't change simply because they die. If anything, it becomes more compelling to commemorate those bad acts upon death as the only antidote against a society erecting a false and jingoistically self-serving history.

In the New Left Project Tom Mills has written an excellent piece The Death of a Class Warrior in which he reviews Thatcher's political career and political legacy. Mills argues that Thatcher provided:

a sustained, violent assault on British society launched on behalf of big business in the name of ‘strong government’ and cloaked in the rhetoric of national renewal. 

Mills argues that Thatcher was able to appeal to and draw on a range of impulses that had developed during the 1970's and had coalesced into a coherent political ideology (often called neoliberalism  or market fundamentalism).  She did this by using the coercive powers of the state to: 

• portray markets as a moral force
• bring about mass support for big business 
• champion markets as an empowering democratizing force
• portray certain forms of state and Government intervention as hampering Britain’s economic effectiveness and corrupting its moral character.
• attack the social basis of collective action and collective ideas
• emasculate those institutional forms that could build an alternative to neo-liberal/ market fundamentalist regimes (such as trade unions, public ownership of public assets and services and  civil society)
• fusing neoliberalism (market fundamentalism) with the moralistic, reactionary politics of ‘Middle England’ and tying the interests of capital to the bigoted preoccupations of their political base.

This sounds awfully like the political agenda of Tony Abbott and the Liberal National Coalition here in Australia.

In their piece in Counterpunch The Queen Mother of Global Austerity and Financialization Michael Hudson and Jeffrey Sommers make the direct link between Thatchers economic and political policies and the current economic and financial crises gripping the UK and Europe.

Mrs. Thatcher became the cheerleader for what became the greatest giveaway of the century as the City of London’s gain became the industrial economy’s loss. Britain’s lords of finance became the equivalent of America’s great railroad land barons of the 19th century, the ruling elite to preside over today’s descent into neoliberal austerity............The Iron Lady was convinced she was rebuilding England’s economy, while in reality it was only getting richer from London’s outlaw banks. Throughout the world, the damage wrought by this financialized economy has been immense.

Hudson and Sommers also point out that one of Thatcher's greatest effects was on the British Labor Party:   

As the uncredited patron saint of New Labour, Mrs. Thatcher became the intellectual force inspiring her successor and emulator Tony Blair to complete the transformation of British electoral politics to mobilize popular consent to permit the financial sector to privatize and carve up Britain’s public infrastructure into a set of monopolies. In so doing, the United Kingdom’s was transformed from a real economy of production to one that scavenged the world for rents through its offshore banks. In the end, not only was great damage inflicted on England, but on the entire world as capital fled developing countries for safe harbors in London’s banks. Meanwhile, governments throughout the world today are declaring “We’re broke,” as their oligarchs grow ever more rich.

And then there is music. Here are 21 Incredibly angry songs about Margaret Thatcher

The destruction caused by market fundamentalist (neoliberal) ideas

"Neo-liberal economics is so bad and has gone downhill at such a rapid rate that it now worships the economic analog to bleeding patients – austerity – as a response to a Great Recession. Millions of people are indoctrinated annually into believing this long-falsified nonsense, and that includes people who consider themselves progressives...

The remarkable aspect of neo-liberal economics is that the power of its myth has survived for many progressives even after its failed dogmas caused massive economic destruction, massive elite fraud with impunity, and crony capitalism so corrupt that it cripples democracy. Indeed, the brainwashing they received is so effective that even after the eurozone ran a massive experiment with austerity that proved (again) to be a catastrophic failure they remain neo-liberal acolytes..........

Neo-liberal economics has devastated the global economy and produced all of the predictive failures and evil consequences that progressives have long attributed to its micro-economic myths"

Bill Black, Associate professor of economics and law at the University of Missouri-Kansas City
writing in Naked Capitalism

Cartoon of the week

In a state where the mining and resource industry controls just about everything this cartoon from the New Yorker is spot on.

Business models and approaches are not the solution to complex social problems

Deborah Allcock Tyler who is the CEO of the UK based Directory of Social Change is a regular visitor 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.

Currently reading: Genealogies of Citizenship by Margaret Somers

Margaret Somers  book Genealogies of Citizenship: Markets, Statelessness and the Right to Have Rights is one of the finest books of contemporary social and political analyses I have read for a long time.

The book describes and analyses how decades of market fundamentalism have transformed increasing numbers of rights-bearing citizens into socially excluded internally stateless persons.  Somers argues us that the power and authority of the market is distorting the meaning of citizenship from non-contractual shared fate to conditional privilege, making rights, inclusion and moral worth dependent on contractual market value.

I rank it with Sheldon Wolin's remarkable book Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism  as among the most prescient and significant diagnoses of our social, economic and political current malaise.

Opposing the business and corporate takeover of human and community services in Western Australia.

This story below from the UK exemplifies the ways that corporations like Serco are driving the corporate and business takeover of human and community services.

As Governments outsource more and more human and community services it is corporations and private firms like Serco who primarily benefit. Not-for-profits find themselves without the capacity or resources to bid for large contracts.  In particular, small locally based not-for profit organisations are the big losers.

Here in Western Australia the corporate and business takeover of human and communty services is precisely what the Barnett Government's Economic Audit Committee Report and its contracting and procurement reforms and public sector reforms will deliver. 

Serco is already the major provider of criminal and community justice services in WA and has huge contracts in health and hospital services. Serco collaborates with large not- for- profits such as Mission Australia and Uniting Care West. Serco is also eyeing off other opportunities in the human and communty services in WA.

The corporate and business takeover of the human and community services is also being driven by institutions such as the Centre for Social Impact at the University of WA, who aggressively promote a market driven and pro-business approach to social policy and human and community services delivery.

However, there is growing community and citizen led opposition to the corporate takeover of human and community services in WA, as exemplified by groups such as Serco Watch, a WA based group involved in monitoring  and exposing Serco's growing power.

The extract below is from the UK Guardian report titled Serco set to take charge of 'big society' initiative


Serco, a leading private contractor, is in line to win a multimillion-pound contract to run the National Citizen Service, proposed by the prime minister as a "big society", non-military version of national service for youngsters aged over 16.

The company, which recently announced global revenue of more than £4bn, has joined four charities in a controversial bid to run what has been described by the government as a key part of David Cameron's big society vision. Serco and its partners hope to win eight of the 19 contracts currently up for tender, with an estimated value of nearly £100m over two years.

The development has raised concerns that the National Citizen Service (NCS) will become another way for private firms to make money from the public sector as charities and voluntary organisations find themselves without the resources to bid for large contracts amid the economic squeeze. Pilot NCS programmes, aimed at bringing together 16- and 17-year-olds from different backgrounds to undertake character-forming community work, have been run by around 60 charities over the last year.

The pioneering work of Elinor Ostrom (1933-2012)

With the death of Elinor Ostrom, activists and campaigners for social and economic justice have lost an important advocate and supporter.

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 partcipation. She cited a comprehensive study of 100 forests in 14 countries that detailed how the involvement of local people in decisionmaking 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.

When profit drives the delivery of human services the quality of care suffers

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."

Phillip Pullman on the "greedy ghost of market fundamentalism"

"there are things above profit, things that profit knows nothing about.. things that stand for civic decency and public respect for imagination and knowledge and the value of simple delight"   Phillip Pullman

This speech by the British novelist and writer Phiilip Pullman describes the 'greedy ghost of market fundamentalism' that haunts the offices, meeting rooms and conference rooms of Governments all over the world. 

Pullman describes how everything that sustains the fabric of a decent society and of communities is destroyed by the onslaught of the market fundamentalists and their acolytes. He is right. A great speech.

 "And it always results in victory for one side and defeat for the other. It’s set up to do that. It’s imported the worst excesses of market fundamentalism into the one arena that used to be safe from them, the one part of our public and social life that used to be free of the commercial pressure to win or to lose, to survive or to die, which is the very essence of the religion of the market. 

Like all fundamentalists who get their clammy hands on the levers of political power, the market fanatics are going to kill off every humane, life-enhancing, generous, imaginative and decent corner of our public life. I think that little by little we’re waking up to the truth about the market fanatics and their creed. We’re coming to see that old Karl Marx had his finger on the heart of the matter when he pointed out that the market in the end will destroy everything we know, everything we thought was safe and solid. It is the most powerful solvent known to history. “Everything solid melts into air,” he said. “All that is holy is profaned.”

Market fundamentalism, this madness that’s infected the human race, is like a greedy ghost that haunts the boardrooms and council chambers and committee rooms from which the world is run these days"

Privatization of the care of vulnerable people

images by Simon Bosch, courtesy of the Sydney Morning Herald

State and Federal Governments of all persuasion continue their love affair with "market based approaches" to the provision of health services and human and community services. 

These market based approaches take many forms, including privatization and contracting out of government services, competitive tendering of services to not-for- profit and for profit agencies, increasing use of for-profit providers and the private sector  to provide services, use of user pay and cost recovery principles, the application of business metrics and the imposition of corporate management models and approaches that have their origins in the for- profit business context.

But they all are predicated on the assumption that applying market principles to the delivery of health and human and community services will drive innovation, deliver greater efficiency and better quality services and save Governments money.

Adele Horin's piece in the Sydney Morning Herald Sad Truth behind Closed Doors is further evidence of the dangers of relying on market based and for- profit approaches in the delivery of health and human services. Horin shows that a reliance on market based approaches is a threat to the health and well being of vulnerable people. 

Horin argues that the reliance on for- profit providers of boarding houses  to accommodate and support people with mental illness has failed to protect and improve the lives of  vulnerable people. Horin draws on the work of Sydney academic Gabriel Drake who calls the rise of licensed boarding houses in Sydney, as "the privatisation of the back wards". 

In a study of inner Sydney licensed boarding houses, Drake describes a situation where large numbers of people with only their disability in common,  live together with little to do, receive poor mental and physical health care, and have few chances to learn skills. Their pension is handed over. They can't afford a bus fare. They become highly dependent on the boarding house owner.

Horin describes how the failure by Governments to provide the funds  and support to people with mental illness who were "de-institutionalized" and moved out of large psychiatric institutions meant that they were thrown to the vagaries of the "market"

And so hundreds moved into the boarding houses which were run for profit with minimal or no accountability or monitoring. People with sometimes serious conditions, such as schizophrenia, went from the state being in charge of their welfare to a boarding house owner.

The state passed a law to license boarding houses that accommodated people with psychological or intellectual disabilities. But three Ombudsman's reports in nine years - two of them secret and the latest delivered to the Minister for Disability Services last month - testify to the failure of the responsible government department, Ageing, Disability and Home Care, to do its job of inspecting and monitoring the boarding houses properly.

A weak law, and some aggressive licensees, did not help the hapless bureaucrats in their role of protecting and improving the lives of the vulnerable residents.

It is time the state government took a serious look at boarding houses, both the licensed kind, and the unlicensed, which cater to a slightly different clientele of poor, single tenants often with alcohol and gambling addictions.