From Zombie Economics to the Public Interest: the challenge for the voluntary sector

With the Productivity Commission inquiry into human services examining 'competition, contestability and informed user choice', the sector faces further transformation as part of a 'marketisation' agenda. Social Policy Whisperer Prof Paul Smyth argues the time is ripe for a 're-invigoration' of the sector.

In my recent lunchtime seminar at the Brotherhood of St Laurence I canvassed a range of Social Service Futures contributions showing why the Treasury-Productivity Commission push for commodifying the social services and community sector would be overturned sooner or later by the need to reassert the ‘Public Interest’, involving new forms of inclusive governance. Since then, Brexit and the federal election have decided it will be sooner rather than later. But how? We have the current PC Inquiry promoting human service markets. Calling it off would be a great budgetary saving but is unlikely. So what is the voluntary sector to do? Go along with an Inquiry that has lost its political mandate? Or, bite the bullet and stake out a claim for a new inclusive governance reform agenda?

As our Councils of Social Service prepare their submissions to the PC Issues Paper I think they should be asking whether it still makes sense to cooperate with an Inquiry couched so crudely in terms of ‘Whose next for marketisation?’ How they respond is looming as a major test of their leadership in a rapidly changing policy environment. Are they going to sign up to the PC logic and cooperate in our  ‘community’ services being overrun by a few multinationals--as has happened in the case of employment services? Or, will they draw a line in the sand and begin a campaign for new governance arrangements which install the social services and community sector as the irreplaceable foundations of a flourishing public realm?

Over recent years, I have seen very good reasons why many individuals within the sector have chosen to keep their heads down politically and wait for more favourable times. At a disability workers conference dealing with marketisation, for example, a truly impressive individual worker asked what she could realistically do other than carry on with work she loved and wait for the policy wars to blow over? A CEO of a smaller agency explained that people like himself had responsibilities to do what they could to keep their shop open and their people--often with families to support--in employment. I couldn't really be expecting them to be rocking the political boat. Sector members such as these look to their peaks to step up to the plate when the occasion demands and surely now is such an occasion.

But how should they engage? One of the early aims of our SSF dialogue was to have both a short and long term perspective. A short term outlook would assume that the PC has the right social governance model and pitch in with some sector learnings in the hope that the model might be improved. In this way we asked various people to write about the experience of marketisation in individual sectors over the last two decades. However, closer scrutiny soon revealed that the model’s theoretical underpinnings were so rigidly circumscribed by the neoliberal economics of the 1980s and 90s that it simply cannot be adapted to the new policy agendas around inclusive and sustainable economies.

A telling example of the rigidity of the model can be found in the current PC’s Issues Paper.   Its main authority for the market model is the English ‘third way’ governance theorist Le Grand, whose ideas were taken up by the Blair government in the 1990s. In that heyday of neoliberal economics, Le Grand developed his ideas of quasi-markets and so on, now belatedly welcomed by the PC as the ‘Other Invisible Hand’. Perhaps the PC missed the supreme irony of invoking the ‘Hand’ after the mess it made of made of global financial markets? In SSF we touch on some of the developments in behavioural, welfare and institutional economics which make the backward looking PC framework ‘no longer fit for purpose’ (see also Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth).

But even more important for the COSS’s at this juncture was our recognition that the renewal of social governance is not primarily an economic question at all. It only became defined as an economic issue when the ‘public interest’ or common good was equated with efficient market outcomes in National Competition Policy. Previously, the social services and community sector were the institutions through which we had always sought to ‘civilise capitalism’--overcoming market failures and tackling inequality. It was their subordination to the free market which took the politics out of social policy and crippled our public institutions.

Post-Federal Election 2016, we have the new imperatives of an inclusive society and sustainable environment to which the market itself must become subordinate. This ought to be embraced by the COSS's as a grand task of social renewal requiring the re-invigoration of our public and community sectors, not their further containment through marketisation. The new politics of welfare is not a time to shelter in bunkers while the storm passes over, but to seize the initiative and work with other social sectors to establish a new reform process capable of the re-articulation and enactment of the Public Interest in Australia.

Paul Smyth is a Professor of Social Policy in the School of Social and Political Sciences, Faculty of Arts at the University of Melbourne.