Homelessness, government outsourcing and “getting kids off the books”

Laurie Matthews set up a drop-in centre for homeless kids in 1972, one of the first in Sydney. He has seen a ton of government social policies in his time running Caretakers Cottage in Bondi, not to mention departmental shakeups and bureaucratic tenders.

Now, it’s all about “outcomes-based” funding, playing the tenders game, and for the government’s part, outsourcing “processes” to external consultants such as the Big Four global accounting firms.

The job of dealing with homeless children is not like a plumbing job, says Laurie Matthews. You can’t just call the plumber and get the drain fixed. When it comes to homeless kids the “outcomes-based” approach really means you get more funding if you can get the kids out of your NGO, get the numbers down, and reduce the cost to government.

“Is it purely about getting the kids off the books and saving money or is it about helping kids to build their lives?” asks Matthews. “NGOs (non-government organisations) funding is based on outcomes, but what are the outcomes, who decides them?”

“A 14 year old can’t just get a flat out there on his own.”

More broadly, the ramifications of outsourcing government are profound. If this outsourcing fad turns out to be another failed experiment in government, the bureaucracy which once ran essential services will no longer be there; replaced instead by the likes of Big Four firms charging up to $1,5000 an hour for their work.

So much bureaucracy has already been outsourced to professional firms that government is being gutted of expertise. Meanwhile, the value of government contracts is heading through the roof.

The funding of homeless kids is managed by state governments where there is little public visibility vis-a-vis contract terms. In NSW, the relevant department is Family and Community Services (FACS)

“(We continue) to be subject to tenders by FACS and although I have lost out in a recent Out Of Home Care tender I have also played the game well enough to win a few too. The recent Out Of Home Care tender was managed by (Big Four firm) EY who, from the outset, were told by workers in the community sector that they had failed to get costing right.

Road-bump for government by consultants amid UK calls for Big Four bust-up

Michaelwest.com.au has sought a response from EY which will be appended to this story when forthcoming.

“It seems, when the government and its bureaucrats hand out tenders, they don’t even need to give a nod or a wink as we all know what the ideology is that must be applied.,” says Laurie Matthews.

“In this recent tender, FACS have made such a show of having a probity officer overseeing the process; however the tender took part in two stages. Firstly, an expression of interest where we laid out our intentions and were successful in getting through to the second stage.

“In the second stage we failed, as we had not offered all aspects of the tender though we outlined every aspect of the EOI. In essence the goal posts were moved while EY had four months to fix their part of the process.

“The central aspect of this tender was to reduce the number of young people in care. I can’t disagree with the aspiration; however aspiration does not fix significant disabilities or parents who are deceased or not interested.

“Of greater importance was to rid the field of small NGO’s as they did in 2014 in the failed Going Home Staying Home tender which cost (then minister) Pru Goward her job. It shouldn’t happen again. We how have seven agencies replacing 33. I understand dealing with just a few agencies is cheaper but it limits the range of responses to young people.”

“I have spoken with Ryan Park (the relevant state minister) about the role consultancy companies plan in setting the conservative ideology of the undeserving poor in practice and at least he is aware of the need to engage with the NGO sector and not ride roughshod over us if there is to be partnerships between NGOs and government.”

Privatisation gravy train rolls on

Matthews makes some valid points and he is by no means “anti-outcomes”). And it is no lay-down-misere that the experiment in government outsourcing is destined to fail. It will work in some cases. From a public interest perspective however, the risk is that when it does fail there will be a vacuum of bureaucracy to fall back upon.

Further, many of the professional firms and their highly salaried workers may be well-intentioned and very bright but what do they know about homelessness apart from statistics? Has the associate at EY who motored through university and now earns $200,000 a year ever actually met a homeless kid?

Does the partner at the professional firm who rakes in the big fees from government had the remotest experience of homeless people apart from walking past them on the way to lunch? Does intellectual savvy have any nexus with common sense?

The risk would appear to be that, if the outsourcing revolution fails, it will come at a heavy cost to taxpayers and the “clients” of NGOs such as homeless kids and the disabled (see story below on the privatisation fiesta in NSW).

Another aspect of outsourcing is that the biggest winners are the Big Four and other consultancies who are not even required to disclose how much revenue they make from taxpayers. Their revenues rise every year yet there is no breakdown disclosed as to their profitability, or their value for money for that matter.

It is believed that now the majority of Big Four revenue derives from government; greater than audit, greater than advising corporations on dodging tax.

Collectively they posted an humongous $7 billion in revenues in 2017 in Australia: EY up 10 per cent to $1.63 billion, Deloitte up 15 per cent to $1.76 billion, KPMG up 10 per cent to $1.5 billion and PwC up 10 per cent to $2.12 billion.

This is a secret bonanza however, and disclosure of state government contracts is far worse than at the federal level. In the public interest, disclosure requirement must be ramped up. Government must also consider – as the Big Four are the chief architects of multinational tax avoidance – refusing government work to any firms who have tax haven connections.

Corporate welfare up, social welfare down