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The Impact on Community Services of Staff and Service Reductions, Privatisation and Outsourcing of Public Services in Australian States Report 1 Report prepared for the Community and Public Sector Union (SPSF Group) Beth Cook, Victor Quirk and William Mitchell June 2012 DRAFT REPORT Centre of Full Employment and Equity The University of Newcastle, Callaghan NSW 2308, Australia Home Page: http://e1.newcastle.edu.au/coffee Email: [email protected] DRAFT REPORT i Table of Contents Page Heading No. Title Page i Table of Contents ii List of Abbreviations vii List of Tables xi List of Figures xiii List of Boxes xv Terms of Reference xvii Executive Summary xviii Chapter 1 – Introduction 1-14 1.1 Background 1 1.2 The transformation of the Welfare State 4 1.2.1 The Keynesian Welfare State 4 1.2.2 Transformation to the post welfare state: the full employability framework 6 1.3 Research approach and content 11 1.3.1 Research Questions 13 1.3.2 Methodology 13 1.3.3 Structure of the Report 14 Chapter 2 – Fiscal policy and outcomes 15-59 2.1 Introduction 15 2.2 Understanding budget outcomes 17 2.3 Commonwealth-State Financial Relations 18 2.4 Fiscal strategy and outcomes: NSW 20 2.4.1 Fiscal strategy 20 2.4.2 Recent developments in NSW 25 2.4.3 Key fiscal outcomes for NSW 26 2.5 Fiscal strategy and outcomes: Victoria 28 2.5.1 Fiscal strategy 28 2.5.2 Recent developments in Victoria 31 2.5.3 Key fiscal outcomes for Victoria 33 2.6 Fiscal strategy and outcomes: Queensland 35 2.6.1 Fiscal strategy 35 2.6.2 Recent developments in Queensland 36 2.6.3 Key fiscal outcomes for Queensland 37 DRAFT REPORT ii 2.7 Fiscal strategy and outcomes: South Australia 39 2.7.1 Fiscal strategy 39 2.7.2 Recent developments in South Australia 41 2.7.3 Key fiscal outcomes for South Australia 43 2.8 Fiscal strategy and outcomes: Western Australia 44 2.8.1 Fiscal strategy 44 2.8.2 Recent developments in Western Australia 47 2.8.3 Key fiscal outcomes for Western Australia 48 2.9 Fiscal strategy and outcomes: Tasmania 50 2.9.1 Fiscal strategy 50 2.9.2 Recent developments in Tasmania 53 2.9.3 Key fiscal outcomes for Tasmania 54 2.10 Summary and conclusion 56 Chapter 3 – Public sector staffing developments 60-101 3.1 Introduction 60 3.2 Public Sector employment outcomes in Australia 61 3.2.1 State Public sector staffing 62 3.3 Public Sector staffing in NSW 64 3.3.1 Recent developments in public sector staffing in NSW 66 3.4 Public Sector staffing in Victoria 68 3.4.1 Recent developments in public sector staffing in Victoria 71 3.5 Public Sector staffing in Queensland 72 3.5.1 Recent developments in public sector staffing in Queensland 74 3.6 Public Sector staffing in South Australia 76 3.6.1 Recent developments in public sector staffing in South Australia 78 3.7 Public Sector staffing in Western Australia 80 3.7.1 Recent developments in public sector staffing in Western Australia 82 3.8 Public Sector staffing in Tasmania 83 3.8.1 Recent developments in public sector staffing in Tasmania 85 3.9 The impact of staffing strategies 89 3.9.1 Staffing increases for frontline services 89 3.9.2 Outcome of staff cuts 90 3.9.3 Other efficiency measures: the case of Shared Services 94 3.9.4 The wider implications of reductions in public sector staffing 98 3.10 Conclusion 100 Chapter 4 – Privatisation in Australia 102-136 DRAFT REPORT iii 4.1 Introduction 102 4.2 Extent of Privatisation in the OECD 103 4.3 The privatisation debate 105 4.3.1 Perceived public sector weakness 105 4.3.2 Arguments for privatisation 105 4.3.3 Risks of privatisation 107 4.4 Privatisation in Australia: the contribution of the Commonwealth Government 109 4.5 Privatisation in NSW 112 4.5.1 Electricity and associated businesses 113 4.5.2 Other potential privatisation initiatives of the O’Farrell Government 117 4.6 Privatisation in Victoria 118 4.6.1 Electricity and gas 120 4.6.2 Public transport and rail freight services 121 4.6.3 Privatisation in other sectors 124 4.6.4 The impact of privatisation 124 4.6.5 Future prospects 125 4.7 Privatisation in Queensland 125 4.7.1 Energy privatisation in Queensland 126 4.7.2 Other recent privatisations 127 4.8 South Australia 128 4.9 Western Australia 131 4.10 Tasmania 132 4.10.1 Electricity 133 4.11 Conclusion 134 Chapter 5 – Public Sector Outsourcing 137-171 5.1 Introduction 137 5.2 The ideological drivers of outsoucing 140 5.3 Arguments in favour of outsourcing 143 5.4 Potential problems with outsourcing 146 5.5 What has been outsourced by state governments? 151 5.5.1 Information and Communications Technology (ICT) 152 5.5.2 Health 154 5.5.3 Prisons, justice and security services 155 5.5.4 Vocational education and training (VET) 158 5.5.5 Other services 159 5.6 The extent of outsourcing 161 5.6.1 Western Australia 162 DRAFT REPORT iv 5.7 Outsourcing to the not for profit sector 163 5.7.1 The contribution of the NFP sector 164 5.7.2 Homelessness and Disability Services 166 5.7.3 Issues with outsourcing to NFPs 168 5.8 Conclusion 169 Chapter 6 – Public Private Partnerships 172-202 6.1 Introduction 172 6.2 Pros and cons of PPPs 172 6.2.1 Efficiency 173 6.2.2 Budget constraints 174 6.2.3 Risk transfer 175 6.2.4 Value for money assessments 175 6.2.5 Contract specification 176 6.2.6 Monitoring problems 176 6.2.7 Other issues 177 6.3 PPPs in Australia 178 6.3.1 Roads 180 6.3.2 Public transport 183 6.3.3 Prisons and Justice 187 6.3.4 Education 189 6.3.5 Water 190 6.3.6 Health 193 6.3.7 Other PPPs 199 6.4 Conclusion 201 Chapter 7 – The adequacy of public services 203-238 7.1 Introduction 203 7.2 Measuring the adequacy of public service 204 7.3 Australia Data Sources 205 7.4 Health 206 7.4.1 Public hospitals 206 7.4.2 GP Services 213 7.4.3 Mental Health 213 7.4.4 Other health services 217 7.5 Housing and Homelessness 218 7.5.1 Housing issues 218 7.5.2 Social Housing 220 DRAFT REPORT v 7.5.3 Homelessness 225 7.6 Education 226 7.7 Disability services 229 7.8 Home and Community Care (HACC) 230 7.9 Child Protection 232 7.10 Corrective services 234 7.11 Conclusion 237 References 239-265 DRAFT REPORT vi List of Abbreviations ACAT Aged Care Assessment Team AIHW Australian Institute of Health and Welfare ALC Airport Link Company ALP Australian Labor Party APS American Public Service (Chapter 2 only) ARC Administrative Review Council AWA Australian Workplace Agreement BOLB Build, own and lease back BOO Build, own and operate BOOT Build, own, operate and transfer CCSU Central Corporate Services Unit CES Commonwealth Employment Service CIT Communications and Information Technology CLCV & CSPPA Consumer Law Centre Victoria and the Centre for the Study of Privatisation & Public Accountability COAG Council of Australian Governments CofFEE Centre of Full employment and Equity CPI Consumer Price Index CPSU(SPSF Group) Community and Public Sector Union – State Public Services Federation Group CRA Commonwealth Rent Assistance CWU Communications Workers Union DFT Department of Treasury and Finance DHS Department of Human Services DHHS Department of Health and Human Services DSE Department of Sustainability and Environment DTFSSC Department of Treasury and Finance Shared Service Centre EIPP Early Intervention and Placement Prevention ETSA Electricity Trust of South Australia EOI Expressions of Interest FAA Financial Accountability Act FE Forward Estimates FMA Financial Management Act FRA Fiscal Responsibility Act FTE Full-time equivalent GBE Government Business Enterprise GDC Ch4 pg 24 GFC Global Financial Crisis DRAFT REPORT vii GGDEA General Government Debt Elimination Act GPP General Purpose Payments GSP Gross State Product GST Goods and Services Tax GTE Government Trading Enterprise HACC Home and Community Care HCoA Health Care of Australia IFS Interim Fiscal Strategy IMF International Monetary fund INSW Infrastructure New South Wales JCH Joondalup Community Hospital LSL Long Service Leave MAE Material Adverse Effect MCC Melbourne Custodial Centre MDU Multiple Dwelling Units MHSB Metropolitan Health Services Board MMBW Melbourne Metropolitan Board of Works MRSA Methicillin Resistant Staphylococcus Aureus MYBR Mid Year Budget Review MYFR Mid-Year Financial Report MYR Mid-Year Review NAHA National Affordable Housing Agreement NAIRU Non accelerating inflation rate of unemployment NCP National Competition Policy ND Net Debt NDA National Disability Agreement NEAT National Emergency Access Target NEM National Electricity Market NFP Not for Profit NGO Non-government organisation NHS National Health Service NOB Net Operating Balance NP National Partnership NPM New Public Management NPP National Partnership Payments NRC1 National Rail Corporation NRC2 National Rail Consortium Pty. Limited NRG Ch 4 page 23 DRAFT REPORT viii OECD Organisation for Economic Cooperation and Development OHS Occupational Health and Safety OICS Office of The Inspector of Custodial Services OOHC Ch5 page26 PAC Parliamentary Accounts Committee PFI Private Finance Initiative PFP Privately Funded Projects PMBH Port Macquarie Base Hospital PSM Public Service Motivation PNFC Public Non Financial Corporations PPP Public-private partnership PS Public Service PSC Public Sector Comparator PTC Public Transport Corporation PTE Public Trading Enterprises QANGO Quasi Autonomous Non Governmental Organisation QEC Queensland Electricity Commission QGC Queensland Generation Corporation QR Queensland Rail QTSC Queensland Transmission and Supply Corporation SDO Service Delivery Outcomes SECV State Electricity Commission of Victoria SEIFA Socio-Economic Indexes for Areas SOC State Owned Corporations SOE State Operated Entities SPP Specific Purpose Payments SSSA Shared Services South Australia TVSP Targeted Voluntary Separation Packages VET Vocational and Educational Training VPS Victorian Public Service VSP Voluntary Separation Program VTESA Voluntary Targeted Employment Separation Agreement WACOSS West Australian Council of Social Services WTO World Trade Organisation DRAFT REPORT ix List of Tables Table No.