The treasurer might be onto something with his belief in values-based capitalism.
IN recent years we have seen a shift towards market-based mechanisms for the delivery of social services, aged care and disability.
The markets created attract private sector capital and expertise in pursuit of the delivery of services, which would otherwise squarely fall to the taxpayer.
This shift has been led by governments of both persuasions in the belief the market is still the most efficient way to deliver aged care and disability services.
In his recent essay for The Monthly, ‘After the Crises’, Treasurer Jim Chalmers argues that the GFC, the pandemic and now the current inflation crisis has exposed the weaknesses and vulnerabilities of capitalism, and that we need to rethink the way our economy is structured towards a more “values-based capitalism”.
Mr Chalmers argues that the problem isn’t the market, it is poorly designed markets.
He follows this with a call for a new social contract and redesigned markets that seek both value and impact, with safeguards in areas of unchecked risk and leveraging coordination and co-investment by government, business, philanthropy and investors.
There are many who would disagree with this view. Economist Ed Shann in the Australian Financial Review argues that governments should not try to interfere with markets: “Capitalism works because self-interest supplies the things customers want.
Farmers, miners and health workers do not need the same social values.” An opposing view comes from Mark Considine in his publication, The Careless State, who argues that any benefits from a market-led approach in social service delivery have already flowed through the system, and the market-led model has been exhausted and does not reliably result in effective or efficient services.
I am no economist or political scientist, but I do work in a role that allows me to see the how the aged care system and National Disability Insurance Scheme work at a systems level (at least in part).
In aged care and disability, I believe market-led mechanisms do create social and economic impact that can’t be replicated by government departments.
However, these mechanisms cannot be seeded and then left to their own devices because they will, naturally, only look after those who can already look after (pay for) themselves.
That is, the market will not, of its own volition, supply quality care and accommodation to those who can’t afford them (being the bulk of the population in need).
Contrary to Mr Shann’s view, I think farmers, miners and health workers do, in fact, have the same social values when it comes to a system that will look after them and their loved ones when they are most in need. If it isn’t the market but the poorly designed market that is the problem, then there is a lot to like about values-based capitalism.
The provision of aged care services and disability services is a critical responsibility of any government. While market-based mechanisms can be successful in delivering these services in some contexts, they require government stewardship to ensure that they are effective and equitable. Mr Chalmers should not underestimate the big job ahead in this respect.
Examples of poor market design include: the unsustainable funding models and rigid rules around pricing; an underpaid workforce not large enough to meet demand; the almost complete absence of private providers in rural and remote areas; the lack of support for people with disability who don’t qualify for NDIS; the regular stories of unregistered provider fraud in the NDIS; the hospital discharge delays for elderly people and people with disability; and the lock up of demand for specialist disability accommodation by state government.
All of this in a context where 70 per cent of residential aged care providers and more than 50 per cent of NDIS providers currently operate at a loss.
If we are to see values-based capitalism working at its best in these sectors, we need to see more explicit acknowledgement by all levels of government that the aged care and disability sectors operate in heavily constrained markets that are, by and large, starting to fail. We need to see more decisive action by government around workforce.
We need to see healthier conversations led by government about user pays in aged care.
These issues share a common need: that is, an understanding by all in government that the role of government in the new values-based capitalism paradigm cannot be just to light the fire, it must stay to nurture and tend it as well.
• Amber Crosthwaite is a commercial lawyer specialising in seniors living, aged care and disability
