In the confidence and supply agreement with Act, the Government agreed to open up employment services to non-governmental organisations (NGO). Usually NGOs are not-for-profit organisations. Social Development Minister Paula Bennett talked last month about the likely providers of these employment services being community based organisations such as the Salvation Army and iwi.
I spoke to someone at the Sallies a few days ago and they have been providing employment plus services for years, but are currently having difficulties because they’re not meeting their employment targets. That’s due to the lack of jobs out there. So in that context, it’s surprising to see them on Minister Bennett’s list.
However, if you read the confidence and supply agreement with Act, you will see it includes private sector businesses, as well as community organisations, as proposed providers of employment services.
This has been tried in the United Kingdom with quite spectacular results – results of coercion, corruption, and corporate greed to be more specific. I suspect this is the reason our Government is dressing this aspect of their reforms with respectable NGOs such as the Salvation Army, rather than selling us the supposed benefits of private sector involvement like they have with prisons and schools.
You can read all about what’s happened in the UK here: the £8.6 million dividend the director of one private provider company paid herself; government funding being claimed fraudulently by private providers on several occasions; people being coerced into working for up to two months with no pay; the displacement of paid workers, and existing staff losing the opportunity for overtime, through the use of beneficiaries as free labour.
I also think it’s worth acknowledging some of the difficulties not-for-profit NGOs will face in engaging as providers. I have absolutely no doubt that they have more capability and experience in effectively building relationships and working with young people than the private sector, and will do a good job if the conditions are right. I would like to add a few words of caution though:
- Government often uses NGOs to deliver services more cheaply than it could. Sadly, this underfunding is often to such an extent that either the organisation is stretched or the programme compromised, or both. There is a real power imbalance between NGOs who are increasingly reliant on Government funding and Government as their funder, and this makes it difficult for NGOs to negotiate effectively
- NGOs operate in a context of severely constrained funding. This means that if Government does adequately fund youth employment services, then the NGOs may well seek to use a slice of the funding to fund core services that have had funding reduced. This is in itself is not necessarily a problem, but sometimes it can get out of kilter.
- The community, voluntary and tangata whenua sector is sometimes known as the third sector. It is an essential element in our democracy and society. All the research tells us that the strength of the third sector, among many others, is the ability to respond to community need and develop initiatives grounded in the needs of the community it is based in and serving, as well as being a conduit for the voices of people. I am very concerned to see the Government increasingly treating the sector as a cheaper version of a Government Department. Cabinet papers show that NGOs involved in providing these services will be subject to many of the same conditions as MSD staff will, and will be expected to alert Work and Income to incidences of non-compliance, which will result in beneficiaries facing sanctions. I can’t see how this is not going to compromise those organisations, and I can see young people being further disconnected. It takes work to build trust with young people who have had overwhelmingly negative experiences of institutions.
Treasury has warned Cabinet against the contracting out approach, noting that due to the complex nature of beneficiary case work it will be very difficult to evaluate and ascertain whether contracted providers of employment services are offering the best value for money. But, as usual with this National-led Government, it seems ideology will triumph over expert advice.