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Service provision fears ahead of NSW privatisation


There is mounting concern over the long-term future of rural and remote and Aboriginal-specific home care service provision in NSW as the State Government seeks to privatise its home care unit by mid-year.

The state-run Home Care Service of NSW is the largest home and community care provider in NSW, with a 70 per cent share of the market for domestic assistance and personal care. The 70-year old provider had revenues of $234 million last financial year, and its 4,000 employees provided services to over 51,800 clients.

The State Government is currently seeking expressions of interest from operators until 24 February, after which time it will move into a ‘restricted tender’ phase. It is expected the privatisation will be finalised by mid-year.

The government has presented the privatisation as a necessary response to the rollout of the National Disability Insurance Scheme and the Commonwealth’s changes to community care.

However, stakeholders say that as a government-run entity, Home Care NSW is a “provider of last resort”, operating in rural and remote areas that may not be financially viable for non-government providers to service.

Additionally, within Home Care NSW is another entity, Aboriginal Home Care, which is a unique provider of home care and support to Aboriginal people. Aboriginal Home Care is officially described as one of the largest employers of Aboriginal people in the state.

Areas of market failure

A former senior bureaucrat with the Commonwealth and NSW Governments told Australian Ageing Agenda that Home Care NSW’s role as a provider of last resort will inevitably be diluted following privatisation.

“Having been involved with programs where that sort of thing has happened, I can say that the role of the government provider as a provider of last resort, or what the department calls its community obligations provider, will inevitably decline. [The government] can say what they like, but history tells you that will be the case.”

Discussing what might occur in a regional or remote area where there were insufficient numbers of clients to cover the costs of providing service, the former bureaucrat said that the level of service might be reduced, or government would have to pay additional funds to the provider.

Mel Gatfield, assistant secretary, United Voice NSW

Mel Gatfield, assistant secretary, United Voice NSW

This potential impact on clients and the continuity of care has been the chief concern of privatisation among the staff of Home Care NSW, according to United Voice, the union representing many of the workers.

Mel Gatfield, assistant secretary of United Voice NSW, said 1,800 workers attended 52 meetings in the lead-up to Christmas, and the major worries raised were around service provision in regional and rural areas, and the fate of Aboriginal Home Care.

The union believes that the best defence against that potential reduction in services is to sell Home Care NSW as a single entity, the logic being that a provider with such scale would have the capacity to subsidise the unprofitable areas and services.

“We were concerned that if this was sold off in chunks you’d see cherry picking. We felt the best way was to keep Home Care as one service, including Aboriginal Home Care,” said Ms Gatfield.

Another voice of concern is Illana Halliday, chief executive officer of Aged and Community Services NSW & ACT, who told AAA that Home Care NSW was the only provider in many small towns.

She said it was expensive to provide services in many rural and remote areas, and questioned whether for-profit providers would continue providing the same level of services at a loss.

“The minister [John Ajaka] has to be very careful with this because you may get a large for-profit provider who is prepared to comply with any contract at the point of sale, but you will immediately lose the ability to control that once you’ve made the sale,” said Ms Halliday.

Concerns for Aboriginal unit

Most of the well-placed sources who AAA spoke to raised the future of Aboriginal Home Care as a particular concern.

It is widely seen as a successful entity, having formed relationships and achieved outcomes that other providers would struggle to replicate.

Discussing the potential implications for Aboriginal Home Care following privatisation, the former senior bureaucrat said that a large non-government provider might cut corners on cultural appropriateness as it sought greater efficiencies across the business, whereas Aboriginal Home Care had a good reputation for going the extra mile to meet clients’ needs. “Efficiencies come from economies of scale which come from standardisation of care; that’s like night follows day. If you are going to get those efficiencies, the services may become less individualised. From an Aboriginal perspective, I would have thought that would raise major concerns.”

Contrary to the belief of stakeholders like United Voice that the best way of protecting Aboriginal Home Care was keeping it within Home Care NSW, Ms Halliday said she had earlier argued it should be kept separate and established as a social enterprise, by government working with Aboriginal people.

Illana Halliday, CEO, ACS NSW&ACT

Illana Halliday, CEO, ACS NSW&ACT

“Because it is working well, and perhaps with some additional support it could become a separate entity,” she said.

Ms Halliday described it as “an absolute shining example of how you can have Aboriginal people delivering services to Aboriginal people in a culturally specific way.” This success story was now at risk by layering another organisation, one that may not be sensitive to Aboriginal Home Care, on top of it, she said.

A related issue was whether the current State Government policy of free home care services for Aboriginal people would be maintained. Presumably the new operator would need to find a way of covering the associated costs. Alternatively, if the policy was abandoned, Aboriginal people would be charged for their services, which would mean many miss out, said Ms Halliday.

Likely future operator

For now, all eyes will be on the tender process, and the outcome.

Sources say the State Government has been at pains to assure stakeholders the privatisation will be a rigorous and transparent process, one that will be overseen by an external “probity auditor”.

NSW Minister for Ageing and Minister for Disability Services John Ajaka told AAA: “The government’s highest priority is ensuring that the new operator of Home Care will continue providing the same high quality services to existing clients without disruption.

“The NSW Government has a clear preference to preserve Home Care as a whole, ongoing entity. It intends that Aboriginal Home Care will remain a vital part of Home Care, retaining its focus on providing culturally responsive services for Aboriginal people and their communities.”

While much of the mainstream media coverage has focused on whether Home Care NSW could go to a for-profit provider – immigration and detention centre service provider Serco among those mentioned – AAA understands that at least one large not-for-profit provider is preparing an application, while several other large NFPs are also tipped to compete.

Another addition to the mix could be providers from outside NSW, especially those that have proven track records of providing services in rural and remote areas and to Aboriginal clients.

Opinion on whether Home Care NSW is currently efficient varies wildly, but a common view is that the value proposition isn’t in the current business, but rather in what it offers a provider – a large slab of NSW, the state accounting for one third of aged care service provision in Australia.

As the department’s own information states: “The organisation has a unique state-wide footprint and has a strong reputation in the market as a quality service provider with a trusted brand.”

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One Response to Service provision fears ahead of NSW privatisation

  1. peter davies March 1, 2015 at 11:19 am #

    NSW voters are only just starting to pick up on privatisation fears and the exorbitant costs they will bring. Poles and power aside, the NSW Government is surging ahead with privatising its entire IT Infrastructure. As privatisation and outsourcing are dirty, expensive words, the Cloud is a much better name for the waste of taxpayers dollars. Clouds are fluffy, pretty in the sky and out of the way. On the ground for IT the Cloud is a VERY expensive, drip-priced, vendor-controlled system that I’m aghast as to why there is not much more noise about it. IT personnel will ultimately lose their jobs while the NSW taxpayer will fork out millions of dollars going to overseas multi-nationals to host the personal records of the people.

    When you’re trying to lodge a DA, search for your unclaimed money or using a mobile app and it’s unavailable, today it’s a matter of a business member to walk around the the IT people and get it sorted together. Soon it will have to be a phone call, then a ticket raised, then more information, etc etc. Get ready for an expensive loss in efficiency. Had your license renewed lately? The card used to be issued on the spot. The card printing was outsourced. The Government cited efficiency for something that now takes a week.

    The Government will have you think that the privatisation of its data centres into two, ie Unanderra and Silverwater, and then getting non-Government entities to host operating systems and applications from there will be an exercise in saving money. This can happen ONLY via an economy of scale and ONLY in the short term. Problem is, once the data is in the “Cloud”, it VERY expensive to get it down again. Ah, who am I kidding; it’s VERY expensive to get up there. Millions of dollars already in the planning. It’s the old business trick. Spout massive money savings to create the interest, identify the need and once the client is truly embedded, hit him with every charge that you can get away with. If the NSW Government cannot see this, they must not be in power. I’m a NSW taxpayer and I’m bloody annoyed as to the upcoming waste of money the Cloud will bring.

    Lastly for all you budding extremists, if you wish to take the NSW economy and bring the state to its knees, you have to look only at two sites.

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