Delivery of Public Services by Non-Government Organisations

Abstract

All levels of government in Australia (national, state and territory, municipal) are increasingly contracting with charitable and other not-for-profit organisations (and, at times, for-profit businesses) for the delivery of public services. While estimates vary about the extent of such arrangements, recent statistics suggest they are a large and growing phenomena. The shift to 'purchase of service' contracting and other forms of 'managed markets' has been partly motivated by a desire to improve the efficiency and effectiveness of service delivery. However, there are some criticisms of the approach, arguing that it leads to a range of problems for not-for-profit organisations, including being burdened by excessive regulation, movement away from their core purpose (so-called 'mission drift'), and a weakening of the connections with the community they serve. This article examines the prevalence of the contracting arrangements and some of the main reasons why they have come about. It also considers the main gains and challenges resulting from such arrangements, in particular for public sector management. The article draws on recent work by the Productivity Commission ('the Commission') including the 2010 study of the contribution of the not-for-profit sector (PC 2010); the 2011 inquiry on disability care and support (PC 2011a); and the 2011 inquiry on caring for older Australians (PC 2011b). It also draws more broadly on a range of other Commission work, including recent reports on government services produced for the Council of Australian Governments (SCRGSP 2011a, 2011b). © 2012 The Authors. Australian Journal of Public Administration © 2012 National Council of the Institute of Public Administration Australia.