Is competition the answer to Australia's ailing human services system?

The draft Productivity Commission’s report on National Competition Policy reforms, released on October 27, 2004, has been widely cited in the media as a strong call for reform of Australia’s “human services” sector, in particular the health and aged care system. According to the Productivity Commission, competitive reform principles have contributed to Australia’s strong economic performance since the early 1990s, and the “human services” sector - by which the commission groups sectors such as health, aged care, education and training - would do well to learn from this experience.

The commission cites as the success stories of National Competition Policy the high rate of increase in real per capita incomes in the second half of the 1990s; the lowest unemployment rate in 23 years; and a surge in Australia’s rate of productivity growth. Social commentator and Director of the Australia Institute, Clive Hamilton, bears this out, noting in his book Growth Fetish that all Australians across the spectrum of income brackets have all been made “better off” in terms of income by the economic reforms of the last 20 years.

However, he and other commentators have taken a somewhat different approach to viewing National Competition Policy and the other economic reforms which have contributed to Australia’s “success”, focusing on Australians’ experience of economic reform, rather than the numbers which the commission cites as evidence of the success of reforms.

Hamilton brings together the growing body of wellbeing and psychological research, which indicates that, although people are ostensibly better off than ever before, they are not happier, or more satisfied. The culture of materialism, in which people have grown to believe that getting more “stuff” is the key ingredient of a happy and worthwhile existence, can be identified as one of the reasons for such widespread dissatisfaction in an era of unsurpassed material comfort.

Competition policy, with its emphasis on productivity and economic growth as the foundation of wellbeing, is one of the key policies fostering this culture of unhappy wealth.

So it appears that it is extremely difficult to have one’s cake and eat it too. Streamlined production comes at the cost of jobs, increased work intensity, pressure on families and the concomitant erosion of community bonds, the social capital that makes it all worthwhile in the first place. The Productivity Commission itself notes in its report how growth may have impact on the “social infrastructure of some communities”.

Michael Pusey’s study of middle Australians’ experience of the economic reforms of the last 20 years goes further. Middle Australians are feeling increasingly isolated, abandoned by government in favour of the interests of “big business,” and ever more under the thumb of the need to produce and gain “positional” goods in a society where meaning and worth is measured in material terms. The commission’s report is silent on the “costs” to Australia of social breakdown, depression and decrease in life and work satisfaction, which wellbeing researchers like Pusey have reported as having occurred at the same time as the economic boom.

What’s more, it is not even clear that the surge in growth has had equal distribution to both businesses and households, or to high and low-income earners. The commission writes that “at face value, businesses generally appear to have benefited more than households,” but goes on to argue that, perhaps in theory, households may have made savings on their indirect consumption. The commission does concede the findings of the AMP-NATSEM report in 2004, which found an increase in household income inequality between richer and poorer areas.

It is alarming to contemplate the application of competitive principles to the struggling “human services” sector recommended by the commission. ACOSS noted in its submission to the commission that the entry under purchaser-provider arrangements into the social services arena erodes social capital, by “changing the character of existing community organisations so that they replicate features of the private business sector”.

It is the human element which attracts many teachers, nurses and doctors to their professions in the first place, and it is this that makes the care for their charges effective: But how can this be measured by “performance indicators”? How can the elusive “human factor” be quantified, in terms of its impact on consumers within the human services sector and also in relation to its importance to the motivation of the workforce?

This is not to suggest that human services could not benefit from greater efficiencies. However, in attempting to make aged care homes or hospitals more “productive” there are very great dangers that well-meaning economic reformers could harm, even remove, the “human” from “human services”. Before that happens, it may be worth remembering that the point of reform, and greater productivity, is the wellbeing of the Australian community, and that more competition, with its focus on “more” in general, may not be the answer.