Friday, April 07, 2017

A problem of privatisation

For decades, successive New Zealand governments have used privatisation to cut costs in the social services sector, contracting out services then grinding down contracts to demand more and more for less and less. It works, for the government, but there's a big risk: that the contractor might decide its had enough and simply walk away. This has just happened with IDEA Services over disability support - and the Minister is not taking it well:

Disability Issues Minister Nicky Wagner has strongly condemned a national disability support provider over a contract dispute - saying Idea Services has been "totally irresponsible" and let down vulnerable clients.

Wagner was responding to questions from Labour MP Poto Williams in question time today. Williams tabled a letter from Idea, the operational arm of IHC New Zealand, informing families they were unable to provide any Autism Spectrum Disorder services because of underfunding.

Wagner, also Associate Health Minister, said she had been told by the Ministry of Health that it was only advised last week that Idea did not intend to renew its contract, after the service had previously indicated they would renew.

Firstly, reading the story, it appears that the Ministry has misinformed their Minister. IDEA Services have been discussing their systematic underfunding and trying to negotiate a transition arrangement for months. But the Ministry has refused to budge, which is why they have this problem.

But more importantly, the Minister seems to be under the delusion that contractors are under some sort of obligation to accept the governments shitty contracts and accept perpetual losses. They're not, any more than Wagner is required to accept my money if I offer her twenty bucks to eat a plate of dogshit. That's inherent in the contracting out model. But when you're contracting out a vital service, its a serious problem.

To point out the obvious: this problem doesn't occur if you don't contract out. But then I guess the government would have to pay what these services really cost, rather than expecting other people to effectively subsidise them out of the goodness of their hearts.