web analytics

The perils of out-sourcing public services

Written By: - Date published: 9:00 am, December 8th, 2010 - 16 comments
Categories: public services - Tags:

One of the features of the neoliberal revolution has been the outsourcing of public service delivery, usually to not-for-profits, sometimes to profit-making entities like private hospitals. Whanau Ora is an extension of this. Two recent stories have exemplified the risk of this model.

First, there’s Hekia Parata’s mates, the Taeaomanino Trust. A family outfit with no track record and, seemingly, inadequate internal records keeping and spending checks, the Trust is typical of many organisations contracted by Social Development and Health. And it is the ideal breeding ground for corruption – all this money flowing in from the ministry, often nebulous performance goals, and a bunch of mates or family running the operation. It seems that $100,000 of our money has gone missing from the Trust’s coffers and the Police are investigating. Nonetheless, the Trust has just been handed a million dollar Whanau Ora contract. Whanau Ora is only going to see more of these organisations putting their hands out and more public money being spent on surprisingly large salaries and expense accounts for little practical outcome.

So, the first problem with the model is that small organisations that are prone to corruption are being handed public money. Within ministries and departments that risk of corruption is countered by the professional culture and the checks and balances that large, established institutions have, which small, new ones lack.

Second, there’s the Otaihape Health Trust in Taihape. Ruth Dyson has been doggedly asking questions in the House about this for months. Otaihape is contracted by the Whanganui District Health Board to provide a wide range of health services to the Taihape population: “its 24-hour access to PRIME-trained registered nurses, its medical beds, its in-patient palliative care, its respite care and day-care services, its maternity services, its meals on wheels, and its mortuary service”. Insufficient funding in the Budget has forced the DHB to make cuts, and its contracts for non-DHB providers has been a logical place to start. Initially, the Otaihape nurses were told they would have to take a 30% pay cut or the centre would close (it’s effectively a hospital, even the Minister called it that when denying any threat of closure). Now, the Trust is definitely going under and the people of Taihape stand to lose all those health services. Tony Ryall’s response: “The Ōtaihape Health Trust is not owned by the Government”. In other words, ‘not my problem if they can’t operate within their budget’. Never mind that his government sets the DHB’s budget, which contracts with Otaihape, so he directly set this chain of events in motion.

So, the second peril of outsourcing is it gives a government a means to cut services by stealth simply by reducing the pool of money for contracts to private providers.

The neoliberals claim this model is all about efficiency – competing outfits bidding for public contracts gets better value for money. As if there are multiple health providers sitting around in Taihape trying to outbid each other. I dare say the cost of the tendering and contracting processes outweighs any supposed efficiency gains.

But you can see why it’s attractive to a government, particularly a bad government, to get someone else to do the actual work. It removes the immediacy of responsibility for the government (much as the DHB system does) – the minister and the ministry can just throw up their hands and say ‘there’s nothing we can do, it was the private provider!’

What if instead, and I know this is a wild thought, we actually care about delivering good value for money services to those in need then we should want those services delivered by accountable, perpetual public institutions.

16 comments on “The perils of out-sourcing public services”

  1. ianmac 1

    I guess Tony Ryall can cause a squeeze which lead to the loss of small units as this will only affect a small number of people and get lost in the “greater efficiency” and “moving funding to frontline services”. Therefore not a biggie in the minds of the voting masses.
    Hang on the Taihape unit was very much frontline!

  2. smhead 2

    PHOs aren’t owned by the government either. So what’s the difference between whanau ora and PHOs? Oh that’s right, whanau ora are Maori organisations, so Marty says they’re more likely to be corrupt and it’s okay to bash them.

    Disgraceful.

    [lprent: You’ve just stated that an author said something that they did not. I do not like people trying to put words in the mouths of authors. In fact I find it disgraceful. Two week ban. ]

    • Bright Red 2.1

      Show me where Marty says it has anything to do with race. You can’t.

      You’re just being a scumbag, smhead, and refusing to engage in the issue.

    • Rosy 2.2

      hmm many community PHOs are operated by Maori providers as well. No-one is calling these corrupt. It’s not about race.

  3. tsmithfield 3

    OTOH, Rob has written a recent post about the crap job that WINZ ( a public body) is doing about administering payments. So going by this example, keeping things within the “public” house doesn’t make things better.

    • Bright Red 3.1

      I don’t see WINZ making 1% of payments in error as a huge problem. I bet it’s far better than you get from small private outfits. I don’t think r0b’s saying WINZ is doing a crap job, he’s just pointing out that it’s a far bigger issue than fraud.

      You can understand why overpayments happen at WINZ. The typical case will be that a person gets a job and doesn’t tell WINZ like they’re meant to, so WINZ keeps paying the benefit until it gets notification from IRD. Then, WINZ has to get the money back from the former beneficiary. Happens all the time. Happened with me in my younger days.

      • tsmithfield 3.1.1

        Two good things about outsourcing:

        1. There is a strong motivation for the private entity to perform or lose their funding.
        2. Its easy to terminate the program if its not viable. A lot harder to do that with government departments.

        • Rex Widerstrom 3.1.1.1

          Which, in a perfect little nutshell, is why I argue for private prisons. Yank their financial chain and they’ll do what you want… including increase genuine rehabilitative programs. They can even be paid a “commission” based on the number of prisoners who go through their programs and don’t reoffend after X years.

          Try reforming any country’s state-run corrective services, however… there’s no incentive to change because there’s no reward (other than praise from a Minister whom no one respects anyway) for doing so. And if you happen to have a Minister who quite likes the idea of prisoners being released through a revolving door, you’re doubly screwed.

          And that reminds me of another benefit – contract law. If a progressive government were, say, to sign a 10 year contract with a progessive corrections provider setting rehabilitation etc as goals then even if they lost office after one term the contract – and the goals – stand; long enough for the benefits to become apparent.

          That doesn’t mean I’m in favour of it for everything, by any means. But prison is one area in which I’ve seen it work brilliantly (and also, if we look to the US, fail abysmally, I admit – which is why you’re careful in choosing your provider and drafting your contract).

          • ak 3.1.1.1.1

            ….prison is one area in which I’ve seen it work brilliantly

            Aye, haven’t we all – the contracting into freezing works in the late 60’s doubled the pay of some – but now they do three times the work for less than originally. Ditto local govt contracting – lots now being taken back in house.

            Big prob is the market’s inherent race to the bottom: over time an overwhelming imperative to cut costs. i.e. staff and service. Which is what we find…..

            … if we look to the US, fail abysmally ….because they’ve been at it longer.

            • Rex Widerstrom 3.1.1.1.1.1

              The model I’m thinking of doesn’t send prisoners out to work for private industry at all*. Nor should any prison, IMO.

              The benefits I’m talking about arise because the contractor is paid on things like number of assaults on prisoners and guards, number of released prisoners who reoffend and so on (with less = more money, obviously).

              In fact the payments are so generous as to have incentivised the prison operator to invest in post-release support for things like housing and finding work as these are known to decrease recidivism and thus increase their income.

              * The exception being prisoners who are on day release to work for not-for-profits like food banks and secondhand furniture and clothing stores. They’re paid by the prison system, however, not the “business”.

      • Vicky32 3.1.2

        “The typical case will be that a person gets a job and doesn’t tell WINZ like they’re meant to, ”
        The problem lies, Bright Red, as you have probably experienced, that if while on UB, you get a job, and tell them “I will be starting work two weeks from now” then WINZ cut the benefit from the day you inform them! (Even if they’re not supposed to do that, and they’re not.)
        But you don’t start work for 2 weeks, and you’re not paid for another 2 weeks after that! So you do as I have done in the past, and tell WINZ only when you have the money in your hand, and they establish a debt even though every cent they paid you for those 4 weeks went in food, clothes and travel to the new job!
        Then the problems really start, when HCNZ accuse you a year later of not having informed them that you were working and want a year’s worth of income-related rent back! (That happened to me, but luckily I was able to prove that I had informed them, that my ‘tenancy manager’ was an incompetent who had lost my file etc.. )
        Starting work can be as big a nightmare as being on UB in the first place!

        • Lanthanide 3.1.2.1

          I am SO glad I have never had to deal with any of that shit. Long may it continue. Nothing aggravates me more than other people failing to do their job and me taking the consequences.

          • TightyRighty 3.1.2.1.1

            you got a typo in there,

            should read “Nothing aggravates me more than other people failing to do a job and me taking the consequences”

            • Colonial Viper 3.1.2.1.1.1

              rather, should read

              “Nothing aggravates me more than National failing to do their job and 170,000 unemployed New Zealanders taking the consequences”

Links to post

Recent Comments

Recent Posts

  • Rental reforms progress to select committee stage
    The Government continues to make progress on a fairer and more secure rental market for renters and landlords with the First Reading of the Residential Tenancies Amendment Bill and its referral to the Social Services and Community Select Committee.  “Now is the opportunity for landlords, tenants and others who want ...
    BeehiveBy beehive.govt.nz
    12 hours ago
  • Papua New Guinea Prime Minister to visit New Zealand
    Papua New Guinea’s Prime Minister Hon James Marape will visit New Zealand from 21-25 February, Prime Minister Jacinda Ardern announced today. “New Zealand and Papua New Guinea have a warm and friendly relationship. I look forward to welcoming Prime Minister Marape here and strengthening the relationship between our two countries,” ...
    BeehiveBy beehive.govt.nz
    14 hours ago
  • Free school lunches served up to thousands
    Thousands of children have begun receiving a free lunch on every day of the school week, Prime Minister Jacinda Ardern said. The Government’s free and healthy school lunch programme is under way for 7,000 students at 31 schools in Hawke’s Bay / Tairāwhiti and Bay of Plenty / Waiariki, extending ...
    BeehiveBy beehive.govt.nz
    14 hours ago
  • Social Wellbeing Agency replaces Social Investment Agency with new approach
    The Minister for Social Development Carmel Sepuloni today announced a new approach that continues to broaden the Government’s social sector focus from a narrow, investment approach to one centred on people and wellbeing. Minister Sepuloni said redefining the previous approach to social investment by combining science, data and lived experience ...
    BeehiveBy beehive.govt.nz
    15 hours ago
  • Government to strengthen protections for whistleblowers
    The Government is strengthening the Protected Disclosures Act to provide better protection for whistle blowers, Minister of State Services Chris Hipkins said today. “The Protected Disclosures Act is meant to encourage people to speak up about serious wrongdoing in the workplace and protect them from losing their jobs or being ...
    BeehiveBy beehive.govt.nz
    15 hours ago
  • PM speech at Parliamentary Chinese New Year celebration 2020
    Nǐn hǎo (Hello in Mandarin). Xīn Nián Kuài Lè (Happy New Year in Mandarin) Néi Hóu (Hello in Cantonese). Sun Nin Fai Lok (Happy New Year in Cantonese) Tēnā koutou, tēnā koutou, tēnā koutou katoa. Thank you for your invitation to attend this celebration today. I would like to acknowledge ...
    BeehiveBy beehive.govt.nz
    19 hours ago
  • Tougher penalties for gun crime a step closer
    Tougher penalties for gun crime are a step closer with the passage of firearms reform legislation through another stage in Parliament. The Arms Legislation Bill has tonight passed its Second Reading. “The changes have one objective - to prevent firearms falling into the wrong hands,” said Police Minister Stuart Nash. ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Arms Legislation Bill: Second Reading
    Introduction Mr Speaker We all know why we are here today. It has been a long journey. The journey did not actually begin on 15 March 2019. It began on 30 June 1997. Almost 23 years ago, Justice Sir Thomas Thorp told us what was wrong with our firearms legislation. ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • New era for vocational education
    The Government’s work to put trades and vocational education back on the agenda took another major step forward today with the passing of the Education (Vocational Education and Training Reform) Amendment Bill, Education Minister Chris Hipkins said. “This is a watershed day for trades and vocational education. These law changes formalise ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Bill to Amend the Greater Christchurch Regeneration Act
    Speeding up the return of Christchurch regeneration activities to local leadership is behind the Greater Christchurch Regeneration Amendment Bill introduced to Parliament today by Minister Megan Woods. “As we approach nine years since the February 2011 earthquake in Canterbury, and with the transition to local leadership well underway, the time ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Milford Track to partly reopen after storm damage
    Hundreds of New Zealanders and international visitors will be able to get back out into nature with the Milford Track partially reopening next week, after extensive assessments and repairs, the Minister of Conservation Eugenie Sage announced today. The popular Great Walk has been closed since 3 February after an extreme ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government drives low-emissions transport momentum
    Up to 110 new EV chargers nationwide in cities and regions 50 electric vehicles for ride-sharing The Government is helping deliver more infrastructure and options for low emissions transport through new projects, Energy and Resources Minister Dr Megan Woods says. Tauranga, Nelson, Levin, New Plymouth and Oamaru are just some ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Kiwis better off under Coalition Government
    New Zealanders are increasingly better off under this Government as wages rise and families have more disposable income, Finance Minister Grant Robertson says. Stats NZ reported today that average household disposable incomes after housing costs rose 4.9% in 2019. This was the highest rise in four years and came as ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Another step towards restoring rights for screen production workers
    All New Zealanders need to have their voices heard at work to ensure we have an inclusive and productive economy. Today we introduce a Bill to do this for workers in the New Zealand screen industry, Workplace Relations and Safety Minister Iain Lees-Galloway says. “The Screen Industry Workers Bill will ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Enhanced Taskforce Green for Southland and South Otago
    The Government has announced further help for the Southland and Otago regions to speed up recovery efforts from the floods.  “I’ve approved Enhanced Taskforce Green (ETFG), making $500,000 available to help with the clean-up in Fiordland, Southland, and the Clutha district in Otago,” Minister for Social Development Carmel Sepuloni said.  ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Employers and Industry take the lead to connect students to vocational education
    Following the announcement that more than 340 schools will be funded to run events promoting vocational education, the Government has announced it will fund a further 257 events to be run by employers and industry. “These industry-run events will allow more than 30,000 students to connect with more than 2,000 ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Rental reforms a step closer with the introduction of the Residential Tenancies Amendment Bill
    Today the Government is making progress on a fairer and more secure rental market for renters and landlords with the introduction of the Residential Tenancies Amendment Bill in Parliament.  “This Bill includes a series of reforms to improve the wellbeing of the 609,700 households that live in rented homes, and ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Biosecurity Minister announces world first eradication of pea weevil
    A Government programme to wipe out pea weevil has achieved a world first, with Biosecurity Minister Damien O’Connor today announcing the successful eradication of the noxious pest from Wairarapa. This means the nearly four-year ban on pea plants and pea straw was lifted today. Commercial and home gardeners can again grow ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Temporary Accommodation Service activated for Southland flooding
    Southland residents hit by flooding caused by heavy rainfall can now access help finding temporary accommodation with the Government activating the Temporary Accommodation Service, Minister of Civil Defence Peeni Henare announced today. “The Temporary Accommodation Service (TAS) has been activated by the Ministry of Business, Innovation and Employment to help ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Bridges: Over-hyped and under-delivered
    “Is that it?” That’s Finance Minister Grant Robertson’s response to Simon Bridges’ much-hyped economic speech today. “Simon Bridges just gave the most over-hyped and under-delivered speech that I can remember during my time in politics,” Grant Robertson said. “It’s not surprising. Simon Bridges literally said on the radio this morning ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Police to trial eye in the sky in Christchurch
    A trial deployment of the Police Eagle helicopter in Christchurch will test whether the aircraft would make a significant difference to crime prevention and community safety. “The Bell 429 helicopter will be based in Christchurch for five weeks, from 17 February to 20 March,” said Police Minister Stuart Nash. “The ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Momentum of trade talks continues with visits to promote Pacific and Middle East links
    The Government has kept up the pace of its work to promote New Zealand’s trade interests and diversify our export markets, with visits to Fiji and the United Arab Emirates (UAE) by Trade and Export Growth Minister David Parker. Building momentum to bring the PACER Plus trade and development agreement ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Coalition Govt’s investment in Customs nets record drugs haul: 3 tonnes stopped at borders in 2019
    The Coalition Government’s investment in a strong border and disrupting transnational organised crime produced record results for stopping drugs in 2019, says Minister of Customs Jenny Salesa. The illegal drugs were seized at the New Zealand border by Customs, and overseas by Customs’ international border partners before the drugs could ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Separated scenic cycleway starts
    Transport Minister Phil Twyford today kicked off construction of a separated cycleway alongside Tamaki Drive. A two-way separated cycleway will be built along the northern side of Tamaki Drive, between the Quay Street Cycleway extension and Ngapipi Road. There will be a separate walking path alongside. Phil Twyford said giving ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Earthquake-Prone Building loan scheme: eligibility criteria announced
    Owner-occupiers of unit and apartments living in earthquake-prone buildings will have certainty about the financial support they’ll be eligible for with the release of criteria for an upcoming assistance scheme, Minister for Building and Construction Jenny Salesa says. The Residential Earthquake-Prone Building Financial Assistance Scheme will help unit owners facing ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Travel restrictions to remain in place as coronavirus precaution
    Temporary restrictions on travel from China will remain in place as a precautionary measure to protect against the spread of the COVID-19 coronavirus. The restrictions which prevent foreign nationals travelling from, or transiting through, mainland China from entering New Zealand have been extended for a further 8 days. This position ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Over $1 million to help Tairāwhiti youth into employment
    Employment Minister Willie Jackson announced today that Tairāwhiti rangatahi will benefit from an investment made by the Government’s He Poutama Rangatahi (HPR) scheme. The funding will go to the Tautua Village, Kauneke programme and the Matapuna Supported Employment Programme which will fund 120 rangatahi over two years. “Both programmes work ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • School attendance has to improve
    All parents and caregivers need to ensure that their children go to school unless they are sick, Associate Education Minister Tracey Martin said today. “The school attendance results for 2019 show, across the board, a drop in the number of students going to school regularly,” the Minister says. “Apart from ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Crown and Moriori sign a Deed of Settlement
    A Deed of Settlement agreeing redress for historical Treaty claims has been signed by the Crown and Moriori at Kōpinga Marae on Rēkohu (Chatham Islands) today, Minister for Treaty of Waitangi Negotiations Andrew Little has announced. Moriori have a tradition of peace that extends back over 600 years. This settlement ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Waikato Expressway driving towards completion
    Transport Minister Phil Twyford today with Māori King Tuheitia Pōtatau Te Wherowhero VII officially opened the country’s newest road, the $384 million Huntly section of the Waikato Expressway. The 15km four-lane highway with side and central safety barriers takes State Highway 1 east of Huntly town, across lowlands and streams ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • 3400 New Zealanders treated in first year of new hepatitis C treatment
    The rapid uptake of life-saving new hepatitis C medicine Maviret since it was funded by PHARMAC a year ago means the elimination of the deadly disease from this country is a realistic goal, Health Minister David Clark says. Hepatitis C is a blood-borne virus which attacks the liver, proving fatal ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Kaupapa Māori approach for homelessness
      Kaupapa Māori will underpin the Government’s new plan to deal with homelessness announced by the Prime Minister in Auckland this morning. “Māori are massively overrepresented among people experiencing homelessness, so, to achieve different outcomes for Māori, we have to do things very differently,” says the Minister of Māori Development ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government steps up action to prevent homelessness
    1000 new transitional housing places delivered by end of year to reduce demand for emergency motel accommodation. Introduce 25% of income payment, after 7 days, for those in emergency motel accommodation to bring in line with other forms of accommodation support. Over $70m extra to programmes that prevents those at ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Important step for new financial conduct regime
    Clear requirements for ensuring customers are treated fairly by banks, insurers and other financial service providers are included in new financial conduct legislation that passed its first reading today. “The recent reviews, by the Financial Markets Authority (FMA) and Reserve Bank of New Zealand, into the conduct of banks and ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Applications invited for $7 million Regional Culture and Heritage Fund
    Applications are now open for the fifth round of the Regional Culture and Heritage Fund Associate Minister for Arts, Culture and Heritage Grant Robertson announced today.   “I am delighted to open this year’s fund which has some $7 million available to support performing arts venues, galleries, museums and whare ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Law Commission appointment celebrates Māori and women
    The Minister of Māori Development, Hon Nanaia Mahuta today congratulated Associate Professor Amokura Kawharu on her appointment as the next President of the Law Commission.  “Amokura Kawharu will be a standout in her new role, leading in an innovative and forward looking approach to the law reform process. She will ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Associate Professor Amokura Kawharu Appointed Law Commission President
    Auckland University legal academic Amokura Kawharu has been appointed as the next President of the Law Commission, Justice Minister Andrew Little announced today.    Associate Professor Kawharu will take up her new appointment on 11 May 2020.   “I would like to congratulate Associate Professor Kawharu on her appointment,” Andrew ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister of Employment launches Youth Ready Employer Programme
    A programme for employers to help them engage effectively with younger employees was launched today by Minister of Employment, Willie Jackson. The Youth Ready Employer Programme contains a range of on-line templates that employers can easily access to help with employing and retaining young people in their businesses. The programme ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Budget 2020 date announced
    Budget 2020 will be delivered on Thursday 14 May, Finance Minister Grant Robertson announced today. “This year’s Budget will continue the Coalition Government’s focus on tackling the long-term challenges facing New Zealand while also preparing the economy for the future. “Those challenges and opportunities cannot be resolved in one budget, ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Prime Minister’s tribute to former Prime Minister Mike Moore
    I move, That this House place on record its appreciation and thanks for the devoted and distinguished service to New Zealand by the late Rt Hon Michael Kenneth Moore, member of the Order of New Zealand, a member of Her Majesty's Most Honourable Privy Council, an Honorary Member of the ...
    BeehiveBy beehive.govt.nz
    1 week ago