The recent Competition Policy review, the first in 20 years, was chaired by an economist, Professor Ian Harper. The final report was released on 31st March 2015.  There is both bad news and good news for aged care.

The focus on ever more competition is bad news but Harper does recognise some problems and the proposed hub addresses his objectives so logically should get his support. Consumer advocacy group CHOICE has commented on the report.  It is a long report so I have quoted a few relevant sections from the Executive Summary.

The bad news

I have only examined the executive summary but from this and from reviews of the report it is clear that it focuses on increasing competition to address problems that have developed over the last 20 years, particularly with the advance of digital technology. This is to be expected from an economist appointed by the neoliberal Abbott government. 

Harper was a leading figure in the market and competition focused school of liberal economics at ANU during the 1980s. At that time Chicago economist Milton Friedman was advising Reagan and Thatcher. Friedman was the driving force in the revival of 19th century laissez-faire economics - the belief in free unfettered markets, their self correcting capacity and their universal applicability.  Thatcher and Reagan drove these policies and by the 1990s they were global.  The ANU school followed this tradition. 

The ANU under-graduate program was firmly and explicitly Chicago-style neoclassical. It was a rigorous program, with an extremely high first-year failure rate, and the program focused on both a high standard of mathematics and public policy, which was unusual for the time  (page 202)

Source: Classical Liberalism in Australian Economics by Chris Berg ECON JOURNAL WATCH 12(2) May 2015: 192–220p 202

Harper moved to the University of Melbourne in the early 1990s.  He played a role in advising the Howard government and was appointed to the Wallis Inquiry into financial regulation and the Fair Pay Commission during that period.

As I will argue in Part 5, increased competition in the absence of an effective knowledgeable customer considerably increases the risk of exploitation and is responsible for poor care and adverse outcomes especially in aged care. Researchers in Australia have drawn attention to international studies indicating that excessive competition is not beneficial in this sector.

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Good news and capitalising on that

The good news is that the report stresses that care should be taken to ensure that increased competition works in the interest of consumers.  Harper has identified a lack of consumer access to data as a problem.  Major problens in Australian aged care are a failure to collect data, a lack of transparency, a lack of knowledge to assess it and very little customer power.

Capitalising on this: The recognition of these problems is helpful for aged care consumers because they make it legitimate to push for involvement in data collection, for more information, for consumer power and for involvement in policy decisions.  These are what the proposed community aged care hub proposes.  It creates a context for this, one that currently does not exist.

Aged care specifically: Harper singles out human services and aged care specifically. He links choice to contestability, which is what is lacking from the planned consumer directed care, but which the hub will provide.

The report stresses that:

  • market competition should be managed well (which is not happening),
  • it should be done carefully (but it is being rushed precipitously and many feel they are not ready), and
  • the focus should be on outcomes (but at the moment the focus seems to be is on choice, commercial opportunities and profits with little attention to monitoring outcomes).

Government is trying to entice investors by emphasising opportunities. Providers intending to enter the sector are strongly focussed on the sectors potential profitability.

Benefits of the hub proposal: The hub addresses all of the problems that Harper has identified and specifically addresses existing market failure due to some of them. It is clear that the competition in the aged care market does not benefit consumers and that the hub if properly implemented will be in a position to see that it does.

Logically, we should expect Harper and those who accept his recommendations to support the concept of the proposed aged care hub as it does what Harper wants.  Whether commercial interests and political ideologists will see it this way remains to be seen.

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A review by CHOICE magazine

The review by CHOICE magazine mentions two of these matters.

The Harper Review into competition laws has been released, recommending reforms across a wide range of industries providing consumer goods and services. - - - Final Report of the Competition Policy Review as a catalyst for delivering real consumer choice and empowering Australians in complex markets.

Development of a framework that provides consumers with access to the data that they create in everyday transactions, with appropriate tools to ensure that consumers can be empowered to make decisions based on what suits their situation best.

CHOICE also has concerns about reforms in the area of human services. - - -  consistent quality and access for Australians should be the priority, and pursuing competition as an end in itself can actually do more harm than good.

Source: Reforms to empower consumers CHOICE, 2 Apr 2015

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Extracts from Harper's report

The final report of the Competition Review can be found here.  Relevant extracts from the executive summary are below.

Our ageing population will give rise to a wider array of needs and preferences among older Australians and their families. Extending choice and contestability in government provision of human services will help people to meet their individual health and aged care needs.

In the Panel’s view, competition policy should:
 - - - make markets work in the long-term interests of consumers; — -

Australia’s ageing population will impose greater demands on health and aged care services. Establishing choice and contestability in government provision of human services can improve services for those who most need them. If managed well, this can both empower service users and improve productivity at the same time.

In the area of human services, the Panel recommends that:

  • user choice should be placed at the heart of service delivery;
  • governments should retain a stewardship function, separating the interests of policy (including funding), regulation and service delivery;
  • governments commissioning human services should do so carefully, with a clear focus on outcomes;
  • a diversity of providers should be encouraged, while taking care not to crowd out community and volunteer services; and
  • innovation in service provision should be stimulated, while ensuring minimum standards of quality and access in human services.

The Panel believes that markets work best when consumers are informed and engaged, empowering them to make good decisions. The Panel sees scope for enhancing Australian consumers’ access to data to better inform their decisions.

Source: Executive Summary, Competition Policy Review 31st March 2015


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We would love to hear your thoughts on the direction aged care should take in order to make life worth living and working in Australian nursing homes: Join our conversation  Author: Dr. Michael Wynne, Copyright 2015