This year, Australian charities have been fighting a federal government attempt to silence them. This is not the first time, and it’s a battle Tim Costello, for one, has fought his entire career. Repeatedly dismissed as “that leftist cleric” by Victorian premier Jeff Kennett during the 1990s, Costello, a lawyer and Baptist minister, is known for his public criticism of state and federal governments on behalf of people who live in poverty. He is now chair of the Community Council for Australia, a lobby and support group for the charity and not-for-profit sector, and he’s worried about a new Morrison government law. “If a charity doesn’t have a documented policy on which staff are permitted to use social media accounts,” Costello said, describing a potential result of the law to the ABC’s Fran Kelly in August, “then they tweet something about a peaceful rally at which there might be some arrests, then the regulator can shut [the charity] down.”

That is indeed a possible scenario under the regulation that federal housing and homelessness minister Michael Sukkar tabled in parliament in August. Sukkar says the government’s Australian Charities and Not-for-profits Commission (ACNC) needs additional powers to deregister charities that engage in “unlawful purposes”, such as trespass or property damage, and who don’t have adequate policies and procedures in place for dealing with activists who go too far. In his mind are recent high-profile cases of activists storming farms and releasing caged chickens or filming cruelty to cattle, and unauthorised climate protests that stop traffic on busy city intersections. But another view is that activism – even the radical, unsanctioned kind – is a core element of civil society in a free country.

Australian governments have for a long time tried to regulate and constrain the work of the charities sector. At the core of the conflict is an ideological disagreement about core purpose. Governments prefer that charities simply deliver services to people in need where the market fails (which used to be what governments did before they adopted the philosophy of “new public management”). Charities say that advocacy – to provide a voice for the voiceless, to critique government policies that aren’t working, to drive policy and social change – is at least as important, and probably more so.

For all the posturing over the “fundamental” importance of protecting free speech, it is conservative governments that most often try to muzzle or over-regulate the charities, known as the “third sector” as they operate in the gaps left by government and the market. In 2003, when he was federal treasurer, Peter Costello (Tim’s brother) circulated a draft law that would have disqualified any charity advocating changes to the law or government policy. The following year, The Australia Institute identified a widespread fear among non-government organisations (NGOs) that the federal government would defund them if they publicly criticised it.

One of the more destructive acts of the Turnbull government was to allow Sukkar to appoint Gary Johns – a former Keating government minister turned outspoken critic of “activist” charities – as ACNC commissioner in 2017. Labor MP Andrew Leigh described the appointment as akin to “putting Ned Kelly in charge of bank security”. It is Johns who would have the power to deregister charities under Sukkar’s regulation. Under Johns, the ACNC in 2019 denied tax-deductible gift status to Global Citizen, an international advocacy organisation that raises millions of dollars for social causes, on the grounds that it tries to pressure Australia’s government to do more to help. (In September the Administrative Appeals Tribunal forced the ACNC to reverse the decision – a ruling that the sector received with relief.)

Senator Rex Patrick moved a motion to disallow Sukkar’s regulation, and unless the government can convince the crossbench to vote against the motion before November 25, the regulation will be defeated. That looks likely. A committee chaired by Liberal senator Concetta Fierravanti-Wells formally recommended disallowance because the regulation may breach the Constitution’s implied freedom of political communication.

Governments’ attempts to muzzle charities and other NGOs are among the most commonly told stories about the sector in Australia. The Greens, which draw heavily on NGOs for policies and members, organisations such as GetUp! and The Australia Institute, and academics regularly go into bat for the sector. But there’s a deeper story, told far less often because it’s in nobody’s interests to tell it, except perhaps of those who rely on the sector’s support. It’s about the extent to which charities – through their managers and executive leaders – actively participate in their own silencing.

“Hollie” is a social worker. Like all frontline workers I spoke to for this essay, she doesn’t want me to use her real name. Like most of her colleagues, she’s not religious. But if they don’t want to work for a government department, people in Hollie’s field often have little choice but to work for one of the big religious organisations: UnitingCare, Catholic Church affiliates, Mission Australia, the Salvos. Hollie works with families. She helps parents address safety concerns so that their children can stay with them. Most people can be good enough parents if they have the right support. Early intervention is often key.

Anyone concerned about a child’s safety – a teacher, a neighbour, a grandparent – can make a “report” to the child protection department in their state or territory (and some people are legally mandated to do so). Each report is assessed and, if necessary, investigated by the department, using statutory powers granted to it by parliament. Investigations are substantiated, or they aren’t. Children in immediate danger are removed and placed somewhere hopefully safe. Where there’s risk that falls short of immediate danger, the department might refer a family to a charity or other NGO to address substantiated safety concerns over the next few months. That might involve anything from working on parenting skills to finding somewhere safe to live.

At least, that’s how the child protection model works on paper. NGOs’ services are generally voluntary, meaning parents must give their consent to be referred into them. (The incentive for parents to agree to a voluntary referral is that it hopefully keeps the department at bay.) But when files began landing on Hollie’s desk, she found that families appeared unaware they’d been referred. Nonetheless, the files already contained pages and pages of allegations about serious harm being experienced by children. “Some of these kids had years of child protection reports, but the department had never investigated, or even tried to sight the children,” she says. “That meant we were making decisions about families based on allegations that had never been tested. Either there was truth to them, which meant these cases were way beyond early intervention, or the allegations were vexatious. We had no way of knowing. Only the department has the power to make that determination. How did we – a voluntary, non-government program – legally even have all this potentially defamatory material about these families?”

Hollie alerted her managers. “A lot of family services work requires pushing back on the departments, which also fund them,” she says. Pushing back is about ensuring accountability in a system where the departments have extraordinary powers, including the power to enter homes and to remove children. The third sector has a vital watchdog role, to help ensure departments aren’t overreaching or under-investigating. “These were exactly the kinds of cases that had to be pushed back. The department had to do its job before we could do ours.” But Hollie’s managers were reluctant. They reminded her of the key performance indicators attached to funding from the department. By design, the department was the only source of the program’s referrals. Declining a referral meant the program risked being seen by the department as recalcitrant, which could have direct funding implications. But taking it on in these circumstances was unethical and possibly unlawful. It was a classic conflict of interest.

When Hollie asked why her organisation had accepted referrals that hadn’t been investigated, she was told the department was stretched and didn’t have anyone available to investigate allegations of serious child abuse and neglect. Nobody had ever spoken to these families about the allegations against them. “It felt like we’d been set up to catch the overflow of work that the department wouldn’t or couldn’t do,” says Hollie. “It’s as if there was effectively no difference between us and the department. I can understand the department’s agenda – I couldn’t understand why we weren’t challenging it.

“I tried to imagine what that would look like: me showing up to a family out of the blue from a random NGO, and being the first to tell them child protection was worried about the safety of their kids. What would I say when they asked how I even came to know about them? … And if I thought the allegations had a basis, I’d need to – what? Make another report? The department already had plenty, and it hadn’t done anything.”

Hollie approached her managers again, who suggested she not mention to the families the unfounded allegations against them, or the fact that the department had forwarded those allegations to an NGO. “Child protection is everyone’s business,” she was told.

When departments fail to investigate child safety reports, the consequences can be horrific. South Australia’s Department for Child Protection, for instance, has been reprimanded in recent inquiries, coronial inquests and a royal commission, ordered after a departmental employee, Shannon McCoole, was revealed to have been sexually abusing children in state care and sharing explicit images of them on an international paedophile website. Earlier this year, the same department told an inquest that nobody had been available to investigate several reports about the safety of two children before they and their mother were murdered by her partner in May 2016. Three months later, Margaret Nyland’s royal commission report reiterated that the department “must be able to provide a timely and focused investigation” within six weeks. When it doesn’t, the whole system breaks down and, in the worst cases, children die. That puts Hollie, and the families, in an invidious position. “I’m being told by my own managers that unless I investigate, nobody will.”

But how could Hollie do the department’s job when she had none of its statutory powers? Her managers told her to use an “information sharing” protocol: a state government “policy directive” designed to ensure children and other vulnerable people don’t endure high-risk situations merely because formal consent to share information hasn’t been given. But inquiries have found that such protocols are often misused. The protocol Hollie was directed to use still requires that decisions to share information about people without their consent be made on a case-by-case basis or where it would be “not practicable or reasonable” to gain consent. Hollie points out that such a protocol is no substitute for an actual investigation. “[The department] can’t even know whether it’s impractical to get consent, because it’s never tried.”

Hollie says her managers could see her point, but they were more worried about biting the hand that fed them. In effect, the organisation was swapping its watchdog role for one that did the department’s bidding. Concluding there were no prospects the organisation would change, Hollie resigned. “When you’re working with children who might be at real risk, you want to do the right thing,” she says. “But in the absence of clear, values-based leadership you’re left to your own devices. You’re made to feel that unless you act unethically, you don’t really care.

“I’m still expecting to see at least one of those cases pop up in the news. Those kids are being failed by a department that won’t investigate, and by an NGO that won’t put any pressure on it to do so.”

It’s not difficult to find other frontline NGO workers being asked to perform what should be the key statutory functions of government departments. In many states, for instance, NGOs that provide support and casework services to clients in public and community housing have been entering into funding contracts that make them managers of their clients’ tenancies or even their clients’ landlords. Often these contracts mean NGOs provide so-called transitional or supported housing, selecting candidates from the expanding pool of homeless people and giving them a house for a few months, or perhaps a year or two, while they’re taught skills necessary to sustain a public housing tenancy or even a private rental. Sometimes it works. But the biggest problem – and it’s now truly overwhelming – is the sheer lack of any public housing stock for people who can’t afford market rents. Waitlists are a decade long in some places. NGOs are accepting enormous government grants to equip people for housing options that don’t exist.

“Lily” works for an NGO that case manages young people in transitional housing in Melbourne. Another NGO manages her clients’ tenancies. She says some NGOs are adamant they will never evict a client to homelessness, and would prefer to breach their service agreements by keeping tenants in their “transitional” properties for seven years or more. The NGO she now works with, however, is “hardline”. “Once a young person’s transitional period ends, they have a VCAT hearing and sheriff lined up to evict them,” Lily says. “We tell our clients we’re there to help them feel confident about their tenancy. But there’s nothing to transition them out to. Private rental isn’t going to happen. There’s no prospect for public housing. Eventually, young people just age out of the program and become someone else’s problem.”

Where once these NGOs were fiercely advocating on behalf of their vulnerable clients, pushing back against public housing departments that wanted to evict them, now they’re often the ones doing the evicting. The narrative commonly used to explain this state of affairs is one that puts NGOs at the mercy of governments’ ideologically driven competitive tendering policies. Again, there’s truth to this. Competitive tendering crept into charities funding during the 1990s, driven first by Nick Greiner’s NSW government and the National Competition Policy of the Keating federal government. Prime minister John Howard’s incoming family services minister, Michael Wooldridge, liked the idea. He referred it to a parliamentary committee chaired by the Nationals’ John Forrest. But the committee heard so many horror stories – governments were “contracting out” risk, lines of accountability were being blurred and some NGOs were promising to deliver services at well below what they should safely cost – that it recommended “further development of competitive tendering processes should not proceed” until much more research had been done.

More than two decades later, competitive tendering is rife. Many charities and not-for-profits – from universities to religious organisations – are now in a state of more-or-less permanent competition with each other. Funding agreements are rarely for more than three years, or five at the outside. These organisations aren’t competing merely to sell barely adequate widgets at the lowest price. They’re often in the thick of life-and-death struggles against poverty, child abuse, domestic violence, homelessness, addiction. And despite all the competition for funding dollars, NGOs’ “customers” have no more choice than they did in the 1980s. If you need a housing provider or a family services worker or a grief counsellor, and you can’t pay, you’ll get whichever organisation won the most recent tender for the geographical catchment you live in. And if that tender wasn’t large enough to cover need, or if the service agreement that’s attached to it was badly drafted, or if your NGO “service provider” prioritises its relationship with its government funders over your rights and wellbeing, well, too bad.

The Forrest committee’s first recommendation in its 1998 report, “What Price Competition?”, was that “the government agency remains accountable for the efficient and effective delivery of services” even if they’re outsourced to an NGO. But outsourcing is attractive to governments because of its usefulness in accountability-denial. State and territory housing departments that outsource to “community housing providers”, who in turn can take rent assistance money from Centrelink, are often cost-shifting onto federal departments. When NGOs trade away their advocacy and watchdog roles in favour of service agreements that require them to perform departmental functions or otherwise compromise their clients’ needs, systemic failures too often go unnoticed until they’re “discovered” by an ombudsman or a royal commissioner or a coroner – in other words, when it’s much too late.

Outsourcing doesn’t need to have poor outcomes, but NGOs that contract with government departments need to maintain their philosophical commitment to advocacy and reform. “Service delivery provides us with firsthand experience of what’s going right and what’s going wrong, and with legitimacy to engage in the policy debate,” says Paul Ronalds, who eight years ago moved from the Department of Prime Minister and Cabinet under prime ministers Kevin Rudd and Julia Gillard to become chief executive of Save the Children Australia. “But I’m kidding myself if I think we can achieve our mission through service delivery. Systemic change is the most important way in which we achieve our mission. That’s not everyone’s philosophical starting point. For us it is, and we’re very clear: if service delivery prevents us from speaking out, we’ve confused ends and means.”

Often, however, NGOs are faced with a difficult, ethical choice: they can either stick to their core functions or they can chase the funding dollar. I’ve spoken to employees of big NGOs who initially applied for policy or research positions, yet find themselves doing little more than putting together grant applications for new packets of funding – or even just reapplying for existing grants. Nobody is forcing NGOs to expand. But as a number of people in NGO head offices have told me, they often measure their “impact” by the number of people they assist.

Perhaps the starkest examples of the ethical choices NGOs face can be seen in the work they do with asylum seekers. Soon after the Gillard government recommenced “offshore processing” on Nauru, Save the Children accepted $36 million to provide services and support to families detained there. The contract soon ran into trouble. The Abbott government didn’t take kindly to Save the Children’s staff contributing to an Australian Human Rights Commission inquiry into detained children. And the company contracted to run the Nauru centre, Transfield, accused Save the Children staff – falsely as it turned out – of coaching people to fabricate sexual abuse claims and to self-harm. The government ordered 10 Save the Children employees off the island. (It later settled a compensation case they brought.) The government wanted Save the Children to agree to a “communication protocol” that would gag it from speaking to media, and a multimillion-dollar “performance bond”, which the government would retain if Save the Children breached its contract. The government also wanted to pay the organisation up to 50 per cent less for doing the same work. Save the Children refused those demands, and sealed its fate when Ronalds fronted a press conference in defence of its removed employees. The government didn’t renew Save the Children’s contract in 2015.

Steering the charities through the brave new world of competitive tendering over the past quarter-century has been a group of corporate-style leaders who look and sound like they’re straight out of company boardrooms. They’re comfortable mixing with corporate donors and politicians, and many of them now have national honours. For instance, during Patrick McClure’s decade-long tenure as Mission Australia’s chief executive from 1997, the national Christian charity jumped enthusiastically into Howard’s privatised Job Network, and even made some corporate-style acquisitions. McClure is a Coalition favourite. His Wikipedia page includes photos of him with John Howard and Scott Morrison, and his government appointments – all under Coalition administrations – include to the Work Choices–era Fair Pay Commission, as chair of two welfare reform reference groups and as chair of a recent review into the ACNC. While McClure was chief executive of Mission Australia, his Wikipedia page boasts, “the organisation grew from separate state-based entities with annual revenue of $50m, to a national organisation with annual revenue exceeding $300m and 3000 staff”. Mission Australia may be doing good work or shoddy work – and I’ve spoken to plenty of people who are less than impressed with some programs it runs – but McClure hangs his hat on the fact that it now does a lot more of it. There are dozens, maybe thousands, of Patrick McClures. One person who works for a well-known charity told me they were directed to nominate their executive for an Order of Australia. (McClure got his in 2003.)

Most of my own working life has been spent in rapidly expanding not-for-profit legal services. Each position was advertised on the Ethical Jobs website, and each allowed me to avoid paying income tax on up to $15,900 each year, ostensibly as compensation for having forgone a higher salary somewhere else. Ironically, most junior lawyers in private law firms – especially doing criminal law – earn a lot less than I’ve been earning in funded legal services.

One place I worked, set up more than 30 years ago by disability rights activists, was initially three staff and a volunteer board dedicated to changing the law to better protect people with disabilities. After two decades as a shoestring operation focused on law reform, it received state government funding to create first one legal service, then another. It began employing lawyers to appear with individual clients at mental health tribunals. By the time I started working there, the organisation’s legal services had expanded to practically overwhelm its law reform advocacy, a situation its director, who’d been there from the beginning, wasn’t happy about. But she’d been overridden by her board, which was keen to grow.

I’d been a criminal defence lawyer, a role dedicated to protecting and pursuing individual clients’ rights through the legal system. I thought I’d be doing the same thing in mental health tribunals. But under the service agreement, the state government – through its justice department – paid my employer a set fee each time one of its lawyers appeared at the tribunal. Our employment contracts guaranteed us full-time salaries, but to “earn” the revenue to pay for them, we each needed to appear in about five tribunal hearings every week. Unsurprisingly, this translated into a kind of unofficial key performance indicator for us. And the fee stayed exactly the same, regardless of what happened to our clients.

After trying and failing for a while to get the tribunal to revoke orders for clients who seemed very low risk, it seemed to me the mental health tribunal was getting the law wrong. The tribunal was mostly rubber-stamping psychiatrists’ applications, and keeping patients – our clients – on unnecessarily restrictive orders. I was working in a state that was among those most likely to detain people in hospitals for mandatory psychiatric treatment. As far as I could tell, no court had considered the legal argument I wanted to make. As a criminal lawyer in a similar situation, I’d appeal. But the service agreement with the government didn’t provide enough funding to support appeals. In fact, it was clear that my representation of each client stopped at the end of each tribunal hearing: my clients were only my clients for as long as the government wanted them to be. My job was simply to churn through five or six tribunal appearances each week, results be damned. It seemed to me that the service agreement contained, if anything, a financial incentive to have clients’ treatment orders confirmed (rather than revoked), because that guaranteed we’d represent them in another tribunal hearing in six months.

My manager agreed that the service agreement didn’t necessarily reflect our clients’ best interests, then explained that it was “set in stone”. They didn’t want to risk upsetting the funder by raising concerns, because it could potentially transfer our funding to another legal service. The Forrest committee was warned in 1998 – by the federal Department of Human Services itself – of the consequences should governments unilaterally set funding and contract conditions. Here was a government doing exactly that, and here I was working for an NGO that had apparently swapped its activism and advocacy for “service delivery” on government terms. Some of our clients had been locked up for more than a decade in the state’s highly restrictive forensic facility, which was originally intended as temporary secure accommodation while high-risk patients with intellectual disabilities received targeted treatment and intervention. Tribunals had been confirming their detention at least twice a year for 10 years, and we’d never once appealed. We wanted to use the organisation’s second legal service to do so, but the terms of its funding agreement kept us far too busy with other work to ever make that happen.

ACNC commissioner Gary Johns is well known for his disdain of what he calls “the charity business”, in which he sees a lot of “impure altruism”. “On the donor side,” he wrote in his 2014 book The Charity Ball: How to Dance to the Donors’ Tune, “there is some self-regard and some agenda chasing. On the charity side, there is agenda pushing and organisation enhancement.” His assumptions about what motivates human behaviour have led him into some bleak territory. He told Andrew Bolt in 2015, for instance, that Aboriginal women “are kept pregnant and producing children for the cash”.

Many of Johns’ public comments are consistent with the right’s beloved “rational choice theory”, a blinkered, limited view that can’t adequately explain the mountains of unpaid overtime performed by hundreds of thousands of third-sector employees, or the countless hours donated by Australia’s armies of volunteers, in the altruistic service of strangers. But it must be acknowledged that, despite its not-for-profit status, the charities sector is big business, and getting bigger. The sector’s income in Australia doubled during the first six years of this century. It grew more than twice as fast as the rest of the economy during the Rudd–Gillard years, and now employs more than a million people – about the same as the retail sector, and five times more than the mining industry.

In some ways, not-for-profits are beginning to look, feel and sound like their for-profit cousins. The largest 10 per cent of non-profits account for 90 per cent of the sector’s income, and employ 90 per cent of its staff. These are the big, often church-based, social welfare organisations that take donations, run op shops, and accept government funding in practically all fields of human hardship. They say millions of Australians rely on them every year. No doubt that’s true. It’s also true that the proportion of Australians who don’t have homes has increased over the past decade. NGOs aren’t responsible for this: it’s a clear failure of markets and governments. But why are governments funding NGOs to case-manage homeless people instead of ensuring people have homes? And why are NGOs taking the money?

Inside many NGOs, there’s a lot of disquiet, especially from workers in the trenches. There is suspicion of the multiple and growing levels of management, and of their comparatively generous remuneration packages and increasingly plush corporate offices in capital cities, which contrast with the tiny suburban and regional digs where frontline workers work with people who can’t compete in the New Economy. “There are six of us sharing a room not much larger than your average bedroom,” one mental health social worker told me, “and we have to somehow speak to clients about incredibly private things, like self-harm, when they can hear other conversations going on in the background.” This social worker drives her own car to her clients’ houses, while her executive managers are supplied with fleet cars.

There’s little sense that the swelling ranks of management in the larger organisations – team leaders, program managers, site and area managers, divisional, state and national managers – are doing much to alleviate the pressure on the frontlines, or to mitigate against mismanagement. Social workers registered with their professional association are required to have regular “supervision” with experienced colleagues outside the strictures of line management, to debrief about the trauma of their work, and to seek professional guidance about risk or ethics. But social workers often find their managers too overwhelmed with funding applications, data reports or other staffing issues to ensure even basic office functionality, let alone one-on-one supervision.

Nearly everyone I’ve ever spoken to – colleagues, friends, acquaintances, strangers – has an eye-popping story to tell: about mismanagement within NGOs and the effects on people’s lives, about conflicts of interest, about competitive pressures, about being told not to speak up. More than 100 teenagers at risk of self-harm kept on the waiting list at a youth mental health service for months. A transitional housing program in a regional centre described as a “hot mess” by a person in the NGO that ran it. A family violence legal service that refuses to represent Aboriginal women who have previously been convicted of a violent offence – citing the service agreement it voluntarily signed with government funders – on the grounds that they’re “perpetrators” of violence and therefore apparently never victims. Problems are regularly exacerbated by cultural incompetence when NGOs provide services to First Nations people and communities, though Indigenous control at executive level is often no panacea for problems on the frontlines. I could go on, but there isn’t the space here. Each of these is an isolated example, but I’ve found isolated examples in nearly every conversation over 15 years with someone who works for an NGO. Workers regularly talk about these problems among themselves, but they wrestle with the ethics of reporting them or talking publicly: nobody wants to risk their NGO’s funding. They cite concerns for their clients, and they’re also worried about their jobs. I’ve wrestled with these ethics myself, including for this essay.

Governments provide nearly half the sector’s money, and practically the entire income for many organisations that provide services to people on the margins. One might assume they’d be doing all they can to make sure their billions are being spent well. But, for all the tabloid bluster about “taxpayers’ funds”, governments are notoriously bad at evaluating the programs they’re funding. Evaluation is about accountability, but government outsourcing of services often has the opposite result. What’s more, frontline staff devote scarce hours each week to entering mountains of data about their clients onto clunky databases from which their managers produce reports for funders. If the data isn’t being evaluated properly, what’s the point?

Data supremacy creates perverse incentives. The chief executive of mental health organisation On the Line resigned earlier this year after a whistleblower-prompted investigation found it may have been inflating the figures it reported to its Victorian government funders for years. Employees told the ABC that staff had been under “escalating pressure to answer more calls” in the context of cuts to staff support while On the Line pursued an aggressive growth strategy, which ultimately meant quantity – numbers of calls – was prioritised over quality. On the Line made the news, but there are plenty of others that haven’t. The conversations I’ve had with frontline staff suggest that data fudging is rife. The incentives are there, and the chances of being caught out are practically nil.

Among the most common complaints made by staff I’ve spoken to point to unsupportive and inadequate management. These problems exist everywhere, but the consequences are especially dire in this sector, where burnout rates are notoriously high. Executive leaders are often at pains to convey how much they value their frontline staff, but something’s clearly being lost in the middle. “I’m not sure how the CEO or the board would even know about the massive problems in our program,” one worker in a large NGO told me. “We’ve been raising these issues with our direct managers for ages, but there’s no sense they get any further up the chain of command.” In an unguarded moment, one not-for-profit chief executive told me: “It’s important to remember that employees and those people who do not wish to lead will always have a sense of tall poppy syndrome.”

In the end, most of the problems in funded charities can probably be traced back to governments and the “new public management” that now pervades their bureaucratic ranks. It’s no coincidence that the non-government sector has swelled at precisely the same time that governments have convinced themselves they should be “steering rather than rowing”, as it was put in the seminal 1992 book Reinventing Government: How the entrepreneurial spirit is transforming the public sector.

The experiences of too many children removed by departments to residential “care” – experiences documented in graphic, unending detail in reports from inquiries into various forms of abuse – provide a final case in point. In 2015, Victoria’s Department of Health and Human Services decided to outsource to charities the transition of teenagers out of residential care. Based on their assessed needs, teenagers are awarded Targeted Care Packages (TCPs), in some cases worth more than $100,000. “The department would then invite us to a panel,” explains “Skye”, a youth worker who until recently worked for one of the many organisations now accepting TCPs. “The panels were essentially auctions. We’d literally bid for kids’ packages. The more complex the young person’s needs, the larger the package, and the more enticing it was for orgs.” Skye says it was the TCP’s dollar value, and not the child it was attached to, that provided the incentive. “Our team leader wasn’t thinking about whether our program was capable of meeting each young person’s needs,” she says. “He was getting pressure from the department to take on the most complex cases, and he was pressuring us to take on young people who were well beyond our expertise.”

Skye was told that, of all the programs her organisation was running, the TCP program was bringing in the most money. “We were a big cash cow,” she says. She says the department didn’t seem interested in how the money was spent, only that it was spent. “There was one young person we’d had no contact with for ages. My team leader told the department we’d spent the entire package, but the records didn’t show that at all.” Skye’s team leader was going to buy Coles and Woolworths vouchers with the client’s unspent TCP funds, but Skye reported that plan to her managers who intervened. Skye no longer works in TCPs. “It was purely about the department contracting out its risk, its accountability and its responsibility for the young people it had already screwed up in ‘resi’ care.”

TCPs are an example of a newer funding arrangement called “fee-for-service”. The same principle forms the basis of the way the National Disability Insurance Scheme and My Aged Care work. NGOs and, increasingly, private businesses are attracted to fee-for-service models because, unlike with block funding dependent on government grants, they can actually earn income. And fee-for-service models are all the rage in bureaucracies convinced that market forces can be harnessed to provide a more efficient allocation of resources in social services. The NDIS is notoriously rife with the consequences of the perverse incentives created by fee-for-service, yet most of the areas in which NGOs provide services don’t even have an equivalent to the NDIS Quality and Safeguards Commission.

What if the millions that governments are spending on “transitional” housing programs and “case management” and “assessment” and “triage” simply went into giving people what they need? An experienced social worker draws me a picture of how the system currently fails: “A person who, after months or years of sleeping rough, finally gets a property – now explain to them they can only have it for a year. Explain that. How is that okay to advocates?” The social worker says that in most of these case-management roles they’re not doing anything. “Case management relies on a fundamental assumption that the solutions exist, and people just need to be linked with them. But we’ve systematically chipped away for decades at the basic structures, to the point that we’re often paying someone $80,000 a year to tell people there are no options for them.”

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