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AGENTS, STEWARDS AND CO-PRODUCERS: USING THEORY TO EXAMINE THE OUTSOURCING OF OUT

OF HOME CARE IN NSW

Bronwen Hanna

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BackgroundMPPP thesis at Macquarie University. NSW March 2010 election LNP promise transition in

line with Justice James Woods Special Commission of Inquiry into Child Protection Services in NSW (2008)

Policy advisor to Shadow Minister September 2010 - October 2012

Outsourcing of human services– governments moving from primarily ‘provider’ to ‘purchaser’ of services eg. NDIS design.

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Aim of ThesisAs objective as possible by relying on 3 theoretical

accounts used in public policy understand relationships involved in externalising service delivery

Map out the landscape - not to poke holes nor solve the problems

Information available to public - ethics committee

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Three Questions1. What is the theoretical underpinning of the

outsourcing of OOHC in NSW?

2. What light does theory shine on strengths and weaknesses of the service model in NSW?

3. Will outsourcing to NGOs automatically lead to better quality of service provision?

(Contradictions and Predictions)

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upheld as best way of dealing with complexities in externalising human services dealing with ‘wicked’ problems

recognise presence of ‘information asymmetry’ between purchaser and provider (Nevile:2013,64)

conceptualise relationships differently and bring different assumptions about how contractual relations managed and how information asymmetry dealt with

emerged in reaction to perceived shortfalls of others

Agency, Stewardship, Co-Production

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Neo-classical economic thought ‘80’s Government as principal; service providers as

agentsPublic sector provision inefficient, non-competitive,

inflexible. Power of market to deliver services – competition,

contractual relationship with clear specifications and remedies, promise of lower costs of delivery, flexibility, higher service quality.

Both sides of politics embraced eg.1998 Keatings Job Network contracted to NGOs, Hilmer Report 93

Agency Theory (Principal- Agent model)

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1. Goal divergence between provider-as-agent and government-as-principal

2. Provider cannot be trusted and will exploit information asymmetries therefore need to control providers through highly specific contracts, frequent monitoring and reporting, use of incentives and sanctions (Van Slyke: 2007, 163)

3. Human services can be specified and measured.

Assumptions of Agency Theory

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Can you measure quality through use of contracts? “If quality is not verifiable, then enforcement contracts cannot

be written for it. In situations where the quality of service is important to the principle, the contract must be structured carefully so the agent has an incentive to provide quality, or at least does not have strong incentives to erode it’ (Oslington:2002, 15,17)

Use of fixed price contracts combined with incentives and sanctions have been found to undermine the very qualities governments are trying to capture and actually provide incentives to erode service quality (such as cherry picking or creaming, parking)

Agency Theory applied to human services

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Agency theory and OOHC transition Unit cost prices very much in line with a purchaser/provider model which

values standardisation/one size fits all. Fixed price contracts appear to focus on increasing capacity. OOHC

funding is released quarterly on basis of number of C&YP receiving a service during each quarter by service model. KPIs around quality don’t appear to be linked to payments.

Question over adequate funding levels. FACS statement ‘with sufficient growth and scale, these unit costs may be workable for agencies”1. If inadequate makes creaming more likely as complex cases difficult to service appropriately

If agencies primarily focused on survival won’t take risks unless outcome is certain – lack of innovation (Constantine 2012:862)

Use of incentive payments for adoption and family restoration . Using incentives can encourage poor behaviour by unscrupulous providers - better for costs to be included in the unit cost price.

1(ACWA Transition Factsheet 4).

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Stewardship Theorygoal alignment; disagree that agents always behave in

individualistic opportunistic manner. Information asymmetries not necessarily a source of risk.

drawn from psychology, sociology2 and research into motivations of NFP service providers mainly undertaken before competitive tendering/NPM reforms of 80s.

providers =stewards “trustworthy and valued employees..servants of someone or something greater than themselves, committed to their work …with discretion to take risks on behalf of their masters” (Cribb:2006)

altruistic, intrinsically motivated, focus on quality of careGovernment role to empower providers. Trust and reputation are

incentives; regulation as a ‘superficial’ form of accountability. Real accountability is where governments put quality and experience as paramount importance (Dicke and Ott: 2002)

2 (Davis, Donaldson and Schoorman 1997)

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Stewardship theory and OOHCNGO’s ‘smaller, innovative, flexible, more responsive”Evidence of developing partnership, references to quality of NGOs in

OOHC documentation, evidence of frank discussion, ‘FACS displaying cooperation and taking into account feedback’ (Transition Program News Edition 4) RIGs partnership approach – regional problem solving.

Evidence of trust and internal responsibility seen in self regulation alongside external roles of CG and Ombo. Performance monitoring framework based on self-assessment as ‘service provider is a partner in delivery of funded services and responsibility for service performance is shared’ – submitted yearly using data collected by funded organisation (FACS 2010:12)

Each organisation is responsible for setting up an internal complaints procedure and complaints made to CS are directed back to agency (NSW Government LA:2013a,8).

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Issues raised by the Research Its assumption that government aims always align with committed and

altruistic service providers - Meagher and Healy 2003 study finds governments focus on efficiency (maximising clients seen) and fiscal control.

Only providers who focus on quality should be dealt with as stewards rather than agents. Not all providers are focused on quality – governments should only enter into relationship with those who are (Cribb 2009:153)

Is stewardship applicable with the introduction of for-profits? Motivational differences (Oslington: 2002:14) Should new providers be treated that same as providers with years of experience behind them, particularly oversight?

How far can stewardship work in a purchaser-provider relationship. The relationship will be defined by the contract, which is non-negotiable3. Appears little involvement by ACWA in unit cost prices, contract set up, nor determining assessment criteria for tenders (ACWA:2012b).

Use of competitive tendering and fixed price contracts raises questions over whether quality is the focus (Oslington:2002:17) Is it more about placement rates and quantity of services over quality of service provision?

3 (McBratney and Lowndes: 2011, 282: PIAC et al: 2009,4).

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Co-ProductionAlso developed in reaction to managerial and economic approaches to

service delivery. shares many assumptions with stewardship theory but differs in its

assumptions around actors. Clients (or ’citzens’) active role in producing services is necessary – service managers and professions are to support, encourage and coordinated the co-production of resources and capabilities of service users and the families and community networks within which they live (Ryan: 2012, 317).

Recognition of complexity of human service provision and relationships involved in service provision - if services are hard to measure then collaborative relationships should be explored” (Altford and O’Flynn 2012:103, Nevile 2013:12) )

Influenced by research into social capital and its decline ‘social capital is as important as roads, bridges and utility lines” (Cahn:2004:24).

Focus on relational learning and improving – feedback from multiple sources, accountability equates to ‘reason giving’ rather than compliance with imposed benchmarks” (Nevile: 2013, 12).

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Co-production and NSW OOHCSimilar to stewardship; regionally based partnerships through

MAG, Regional Implementation Groups – FACS and NGOs setting up locally appropriate mechanisms for joint placement decisions (ACWA et al: 2012b). Consortia and partnerships with Aboriginal providers (AbSec: 2013).

Locally based decision making and monitoring good but does FACS have appropriate staffing for relationally intense localised partnerships that co-production envisages?

Relationally based oversight mechanisms. Evidence of service providers that much of information gathered from regional NGOs never checked by government officials 4

4 (NSW LA Committee - Community Services Inquiry into Outsourcing Community cServices delivery)

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Co-production and NSW OOHC Issue with Competitive tendering undermining co-production

- impact on smaller community organisations. (Evans et al: 2005; Oslington: 2002, 10)

- undermines flexibility in rural and remote areas (McDonald 2012: 103)

- works against collaboration between agencies- focuses on narrow targets, incentivising capacity over quality?

Role of foster carers and support for themBest outcomes when families engage willingly with them rather than

compelled (Nevile 2012:18) Coercive nature of child protection in Australia (more crisis driven than early intervention)

Points to need for a focus on broader goals for OOHC - less about risk and more about maximising chances of experiencing safe and healthy lives free of abuse in supportive communities (Alford: 2011)

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ConclusionsCompetition and collaboration “Centralised decentralisation” rather than co-production. Largely based on purchaser-provider model Issues around competitive tendering - undermines very things

trying to access by externalising servicesIt’s the contract that counts – points to prioritiesUnit cost price adequacy – more for less? expensive and intensive

work. Positive evidence of stewardship in design and implementation -

partnership between FACS and NGOs – adaptive behaviour FACS Accountability – one size fits all? Do we assume all agents are

untrustworthy and need rigid monitoring or all stewards are trustworthy and will not abuse autonomy given by principals. Issues re self monitoring

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Questions?