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The dark side of private-public partnerships

By Rowan Kernebone - posted Wednesday, 24 June 2009

There are two main sources of government control over a society: legislative and regulative. Both are well worn paths of achieving the government’s aims and objectives. Increasingly though, there is a third tier to the control mechanisms of government, the use of contracts.

Contractual governance is nothing new. The management of taxation in the Roman Empire was a contractual one in essence. The Romans would sell off the rights to collect tax to the highest bidder, in effect taking the tax they expected to make from the sub-contractor (for want of a better title) and then allowing these sub-contractors to officially reimburse themselves through the tax they collected from the populace. Roman tax rates were not set by the government but by the subcontractor allowing for the actual tax, and the profit margin set by the subcontractor. It is easy to see what sort of problem these arrangements caused the Roman world.

So contracts have been a feature of government business and policy implementation throughout history.


Most government contracts are fairly benign. Contracts for the provision of goods and resources are a well trodden path: stationery, weapons, land; all are easily recognised as necessary to ensure the proper working of government.

So why the change?

Legislative control is very much an iron bar, the laws created to achieve the government's aims can be both too loose (as with most laws created by Westminster countries) or too controlling (as with most law created by non-Westminster countries). Legislation which is too loosely worded will leave policy implementation wide open to interpretation, potentially changing the very nature of the policy intention. Legislation which is too controlling may result in unintended consequences for implementation not originally envisaged by the government policy makers.

Regulations are much the same but with the added consequence that the control aspect is left to an essentially un-representative body that has little if any accountability to the people, and what accountability it has is generally directed through the government, leaving this political body with the consequences.

Contractual governance is different though. It is the use of non-government service delivery to achieve government policy aims: forgoing the legislative and regulative functions of government.

Just think of a modern road-work. As I take my socially unacceptable smoke break, there is a road-work crew laying down some tar. Once upon a time, the depth of the tar on the road, the number of traffic control operators and time-frames for completing the works were managed through legislation and regulation. Now-a-days, thanks to contracts, these old requirements can be included as part of a contract and enforced through contractual law, doing away with the need for the parliamentary oversight functions embedded in the formation of legislation and the review of regulations (not that these aren’t used).


Government can also make these contracts commercial-in-confidence keeping their inner workings from prying eyes. Road works may not be an exciting example, but the true dark-side exists when you use contracts in the delivery of social services. Contractual control can be very directive. Implementation enforces its rewards and punishments directly on those involved, first the company and through them the public.

Contractual governance can be very useful in ensuring government policy (both good and bad) is implemented through the embedded enforcement of rewards and punishments. Simply put: contracts, being steeped in judicial precedent and common usage, are a well recognised tool to achieve a desired outcome.

The Job Network included many provisions for the docking of the job seeker's dole cheque if they didn’t comply. The legislation didn’t leave much room for compassion; the government contracts with the service providers left even less room (though some organisations such as the Salvation Army did refuse to go through with the act).

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About the Author

Rowan Kernebone is currently studying for a Masters in Public Policy and Management through Monash University. He has so far had an eclectic career within the welfare sector for 19 years. He currently works for the NSW Department of Community Services. his main academic interest is in governance of community sector and government organisations.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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