All aboard: private sector rushes to join latest government gravy train

Two key weaknesses that helped spark the pink batts and school hall policy debacles are about to strike again. This time, the National Disability Insurance Scheme and home care packages for the elderly or those with a disability are in the firing line.

A government will say the pink batt and school hall programs were an essential part of an emergency response to the global financial crisis. The aim was to get as much government money out the door, as fast as possible, to stimulate private sector activity, to avoid a recession. This was a most unusual and challenging time. We have learned from these debacles. They will not be repeated.

The pink batts home insulation scheme was plagued by problems.

But the systemic weaknesses that were fundamental in the failures of both those programs still exist - an ill equipped public service, and a private sector keen to get aboard the latest "gravy train".

The public service has effectively been denuded of essential talent by years of spending cuts and efficiency dividends – many departments are now referred to as gutted shells.

Moreover, so many government spending programs are all too easily perceived by many in the private sector as easy ways to make money, and are able to be exploited by unscrupulous and avaricious individuals through to large companies - some even engage in fraudulent behaviour.

In the pink batt debacle, the urgency aside, the design and implementation was initially given to the Department of the Environment,  with zero experience in service delivery. The program began to unravel from day one.

At the time of the announcement of the program there were about 200 recognised installers. Within eight months it was 8,359,  employing more than 12,000 people. Basically, anyone with a ute, a ladder, and and access to the batts was in the business. The department didn’t have the people, the skills, or the capacity to even vet/train the installers, let alone effectively control the roll-out of the program. About 70 per cent of the original 200 companies went belly up, with a resulting loss of livelihoods, homes and friends. Families broke up. There were suicides.

Kevin Rudd visits the assembly hall of Coorparoo State School in 2010, built as part of his government's school hall program.

Photo: AAP

While the features were somewhat different in the school halls program, the departmental dysfunction, and the excesses and abuse, were similar. The bureaucratic response was complicated by overlapping federal and state education responsibilities, but the private sector was quick to overcharge and over-provide. I was told of one large NSW public school that was well advanced in its planning and costings for an auditorium, but with the advent of the program they were advised to use a “preferred builder” at approaching twice the cost. Millions were also wasted on school halls where the schools actually closed shortly thereafter.

The private sector rush is now on to get involved with the NDIS and home care packages. Again the capacity of depleted departments to handle the dramatic increases in numbers of people wanting to register is inadequate. A large part of the 600 per cent increase in the costs of the administration of the NDIS to the end of the decade, to more than $21 billion as revealed in last year’s budget, is the explosion in its bureaucracy, which is in turn reflected in the government’s job creation boast. I fear this will prove to be an underestimate of the cost of the program, especially as the number of people identified as having a disability is expected to quadruple.

With the NDIS, part of the rush is to register as a disability service provider. The registration process has been described to me as merely “tick and flick”. Not surprisingly, the number of providers is also expected to quadruple, into tens of thousands.

I gather the registration requirements are tougher for home care package providers – many already recognised as disability service providers are being rejected. Some were also originally childcare providers but this area is getting tougher to exploit as government spending is more closely monitored. However, the queues for registration are lengthening in the face of limited departmental staff capacity.

The private sector is lining up to register with the NDIS.

It seems that the private sector rush to get some sort of registration/accreditation for these and other programs is driven by a desire to either access the government’s “rivers of gold” directly and/or develop a fee-based service or consultancy business that in some cases will exploit the vulnerable. Many pink batt installers used to flog their wares door-to-door.

The latest budget also boasts of tens of billions of dollars of infrastructure commitments and hundreds of billions to be spent on defence procurement. In both cases the cost/benefit processes are often inadequate, lacking essential transparency, and are not pursued according to national priorities, with very poor accountability as the money is allocated. Both defence procurement and infrastructure are notorious for “blow outs”, in both time and expenditure, running into the billions and billions.

If you had any doubt as to the private sector’s desire to be part of the defence gravy train, just stand at the baggage collection area at Canberra airport and note the dominance of large illuminated billboards advertising global defence contractors.

The most significant failing of recent federal governments, more important than their preoccupation with political point-scoring and blame-shifting and more important than the difficulties encountered in gaining parliamentary approval, has been the implementation and service delivery of key policies.

Suddenly, a new spending program is committed, often with great community euphoria, but with little or no detailed consideration of just how it could be effectively delivered.

With an ill equipped public service, and elements of a profit-seeking private sector keen to game the system, the final outcomes often fall well short of community expectations, at considerable additional cost to the taxpayer.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.

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