Uniya Newsletter: Autumn 1995, p 3. Selling our Services and Souls David de Carvalho provides an update on the Charities Inquiry. (David de Carvalho is a Social Policy Officer at the Good Shepherd Youth and Family Service in Victoria.) IN OCTOBER 1994, the Industry Commission [IC] released its Draft Report on Charitable Organisations. The Commission provides economic advice to the Federal Government. The core issues addressed in the draft report are: - resourcing the sector through: direct government funding indirect government funding via tax concessions direct funding from the community direct funding from "clients" contributions from volunteers - improving quality and performance - accountability - support mechanisms - partnerships with government and other agencies. For community welfare agencies the waiting was indeed anxious. IC inquiries focus narrowly on economic efficiency and have been criticised for their application of neo-classical economic theory to complex social phenomena. Many hoped that the welfare sector advisers on the inquiry team might provide some balance to this economic approach. Despite their best efforts, the report ends by applying economic rationalist analysis to the welfare sector — which generally aims to repair the social damage exacerbated by economic rationalism. The result is a view of social welfare services as akin to any other market. And since the primary purpose of the inquiry was to investigate how governments can get greater value for their spending on social services, the IC has predictably resorted to economic rationalism's market-based cure- alls, namely privatisation and competition. In practice, this means that governments are encouraged to contract out services, and to "purchase" specific "outputs" from community agencies at prices and/or qualities determined by competitive tendering. Agencies are encouraged by the Draft Report to amalgamate, to make better use of volunteers and to increase their donor base as means of increasing their competitive advantage over other agencies in the scrap for funds. Their goal, according to the IC, is to become cost-effective sellers of units of output to government. Government is the real master, and those with whom agencies work become incorporated into these output units: "In the family support area, the inputs can be measured as hours of counselling, while the outputs may be families assisted." All of this is in stark contrast to the rhetoric and theory of privatising welfare services and introducing greater competition between agencies, a move that is supposed to improve the choice available to people using the services. Clients are seen, in theory, as sovereign consumers in a social service supermarket. Competition is supposed to impose "the discipline of the market" on agencies that are assumed to be inefficient. The reality is that the report treats people served by agencies as mere factors in an output equation. Government, instead of being a "price-taker" in a perfectly competitive market, in fact exercises a monopoly influence in the setting of prices for services. Tighter contractual obligations are recommended, as are new funding regimes and accountability measures, all of which have the potential to undermine rather than enhance the flexibility, responsiveness and creativity of community agencies. This way of conceiving the community sector and its operations is very convenient for governments attempting to reduce expenditure on social services. But is utterly anathema to those agencies truly focused on being able to meet the needs of people, especially in a way that enhances their personal dignity and sense of belonging to a just and caring society, rather than one which merely exhibits the characteristics of allocative efficiency. That said, the Draft Report does contain many redeeming features. Its very first re-commendation is that service agreements between governments and funded agencies be for a duration of three years. Currently the standard length is one year in most agreements. The longer period will provide greater financial security and the ability to plan and experiment with new approaches to changing needs. The Report also recommends that such funding agreements be made legally binding, as a means of ensuring that government does not renege on funding allocations. The Commission is seeking further information and ideas from the sector about a range of issues, including: - how the needs of ethnic communities are being met - reporting and accountability in relation to fund-raising - processes for improving accountability of funded agencies - proposals for streamlining the tendering through the use of "lead agencies". The closing date for written responses to the draft report was 30 January. A second round of public hearings around the country began in late February. The final report will be prepared for Federal Parliament by 16 June 1995.