People don’t normally associate human services like disability, aged care, and homelessness services with markets and competition. However, this is changing as Governments move to introduce reforms like consumer directed care and contestability into human services. The draft report of the Harper Review on Competition Policy has called for Governments to go further with deepening competition in human services given the significant potential for productivity gains and broader community benefits.
KPMG recently examined how Governments can regulate in different ways to encourage the right conditions for human services markets to grow and flourish. This doesn’t necessarily mean less regulation but it does mean smarter and more sophisticated regulation. Human services are not like most other markets – there’s information asymmetry with clients who are often vulnerable and disadvantaged and service providers who are mainly not for profit groups who have historically relied heavily on direct government funding.
Protecting the vulnerable and disadvantaged and ensuring equitable access to quality services are the main motivations for government regulation of human services. However, there has been a tendency to focus on worst case scenarios and to develop systemic responses to isolated adverse incidents. Governments have also tended to adopt overly paternalistic and coercive approaches which have fostered a culture of passivity amongst both service users and providers.
The key is finding an approach which balances the need to provide adequate protections and equitable access with the need to encourage the growth of markets that can deliver greater choice and diversity for consumers. This means Governments need to focus much more on how they can empower consumers and involve providers in designing regulatory and non-regulatory responses in human services.
We set out a framework for a new way of thinking about regulation to harness the power of emerging markets in human services and create value for service users and the economy more broadly.
Access KPMG’s full report Unleashing value: rethinking regulation in human services.