Shifting from Social Provision to Social Investment

The social sector has only recently begun to see itself as a critical economic player. But as governments shift more from social provision to social investment, David Hayward, Professor and Dean of the School of Global, Urban and Social Studies, RMIT University asks whet her it can and should think still more broadly and internationally – and even about how to ‘mix it ’ with the Sercos of the world?

This article was published in the latest edition of Insight, the VCOSS member magazine.

Rarely does a day go by without hearing someone on ‘the left’ lamenting the damage being done to Australian social policy by that familiar villain, neoliberalism. ‘There are cuts, cuts and more cuts with no relief in sight.’ ‘The Australian welfare state is shrinking’, so the story goes, ‘and what a travesty that is for all of us.’[1]

The trouble with this view is that it sits rather uncomfortably with the evidence. As Figure 1 shows, the long term trend in Australian social spending is upward not downward and that picture seems not to be affected by whether it is Liberal/National Coalition or Labor governments that are in power.

This upward trend in social spending is not peculiar to Australia, but reflects a similar pattern evident in other western countries.[2]

Social policy researchers have been aware of this for some time now. In 2008 the British scholar Peter Taylor-Gooby argued that Western welfare states were going through a new phase, very different from what went before. The latest phase was characterised by continued growth in spending, coupled with a focus on using social spending to facilitate economic growth. He called this the ‘social investment state’, involving: “A shift toward a view that the government is to promote national competitiveness in an increasingly international market, and away from a passive providing state to one which seeks to enhance self-activity, responsibility and mobilisation into paid work among citizens. Social policy is shifting from social provision to social investment”.[3]

This shift has been uneven temporally and spatially, and it has been partly hidden by new forms of welfare delivery, including the increasing use of contracts and private forms of delivery. Not every category of beneficiary has been a winner, for while the middle class has done rather well with new forms of entitlements, the ‘social investment state’ has been particularly harsh on those with the most precarious access to employment: including the unemployed, single parents, Indigenous people and refugees.

Reflecting and reinforcing this shift to the social investment state is the emergence of increasingly large, global and private providers of public services. Firms like G4S (security services), Serco (justice, security, administration), and Transdev (public transport) are but three of the most well-known of these, all with large Australian-based operations. Serco provides an excellent illustration of the scale and scope of these enterprises. It is now a $4.7 billion organisation that employs more than 100,000 people in 30 different countries. According to its website:

“Serco began in the 1920s as a UK subsidiary of Radio Corporation of America... Just over 30 years later, we won work that was to shape our future direction. From a maintenance contract for the UK Ballistic Missile Early Warning System at the Royal Air Force base at Fylingdales, we expanded into the operation of its technical facilities.

After a management buyout in 1987, we were renamed Serco Limited. In 1988 we listed on the London Stock Exchange... At the same time, Governments across the developed world introduced competition for programs to sustain and improve public services... We moved into the civil government, transport, commercial and industrial markets, and established operations in Asia Pacific and North America”.[4]

With the growth in social expenditure in Australia set to continue for the foreseeable future – with an ageing society and the rollout of the National Disability Insurance Scheme (NDIS) being key drivers – this trend towards increasingly large, global and private providers entering the market is likely to continue, raising important questions for the traditional social services system, notably not-for-profit social service providers. Social services will be one of the most important contributors to economic growth and employment in the decades ahead. Recent labour market projections make this pretty clear, with employment in health and social services predicted to lead the way over other industry sectors (see Table 1).

These changes and growth have important implications for the social sector. One is whether it is time to start thinking about a different identity. For much of the last 150 years, the sector has tended to identify with welfare and to portray itself as something that exists independent of the economy, almost as if to do otherwise would be heresy.

In reality, for a very large number of Australians the social sector will be their future industry of employment. They will start and end their lives working in a rapidly growing industry, pursuing professional careers helping a diverse range of clients and organisations, some of which may be public, but most of which will be private or not-for-profit entities. They will increasingly be tertiary qualified, with a growing number possessing multiple degrees and other ‘micro’ credentials that will enable them to shift within the sector to new roles and new client groups.

As an increasingly important component of the Australian economy, the sector will need to think more broadly and internationally. It will need to think about taking its skill set offshore, for it is not only the West that has been witnessing an expansion of the social sector. Asian nations on our doorstep are now putting in place the foundations for their own welfare states. In so doing they will draw on their own rich histories and cultures, but will also be looking to others with the expertise to help them chart out something better than what has gone before.

We need to think not just of being an industry, but of being a global participant, able to mix it with the Sercos of the world and do it really well.

The ‘social investment state’ has by no means been a bed of roses. It has seen an expansion of the sector alongside increasingly tough and authoritarian measures aimed at those unable or unwilling to work. But for all its sins, it offers a marvellous opportunity to develop a brand new industry full of all the values that we hold dear and which could in time come to rival the crass materialism and questionable ethics that continues to bedevil the private sector. That’s an exciting possibility and one that’s surely too good to let slip.

David Hayward is Professor and Dean of the School of Global, Urban and Social Studies, RMIT University.

 [1] Eva Cox provides a good illustration of this when she says our welfare state “has been gradually undermined … as neoliberal policy models of a minimalist state started to displace more socially driven policy priorities”, in ‘The state of Australia: welfare and inequality’, at The Conversation, accessed at  on 19 July 19, 2015

[2] P Abrahamson, ‘European welfare states beyond neoliberalism: toward the Social Investment State’, Development and Society, Vol. 39, No. 1, pp. 61–95, June 2010.

[3] P Taylor-Gooby, ‘The new welfare state settlement in Europe’. European Societies, 10(1): pp 3–24, 2008.

[4] Available at