Introducing competition into aged care will improve the capacity of the system to meet consumer needs and drive efficiency and service innovation, but firm government oversight will still be required, the chair of the government’s Competition Policy Review panel has said.

Ian Harper
Professor Ian Harper

Speaking to Community Care Review, Professor Ian Harper said competition was a powerful dynamic for increasing the power of consumers to choose the services that best met their needs and lit the “Bunsen burner of innovation”.

“The power of competition is the ability of the consumer to say ‘no, I’m going somewhere else’,” he said.

Professor Harper, an economist and former chairman of the Australian Fair Pay Commission, said governments would have an ongoing role in areas of thin markets, as a provider or in mandating services directly, but government intervention should be “the exception rather than the rule”.

He said government should continue to accredit providers that meet and maintain minimum quality standards, without raising barriers to entry.

“There needs to be a firm government oversight into the quality of the services provided, into who it is who is accredited to provide the services – no one wants to change any of that.”

The Harper Review said that in sectors where choice may be difficult, purchase advisors should be available to help individuals make decisions in line with the best interests of the users.

The report said that a default option should also be available for users unable or unwilling to exercise choice and disadvantaged groups should be offered greater assistance in navigating the choices they face.

The Federal Government is introducing greater competition in home care from 2017 when the Aged Care Approvals Round will be abolished and care packages allocated to consumers to direct to their provider of choice.

Professor Harper said organisations that were less efficient and responsive would disappear from the market.

In the area of human services, which includes areas such as health and education, Professor Harper said the government was most effective as funder and regulator, rather than service provider.

“It doesn’t mean that the state should be driven out totally, but to the extent that we can, let’s move the barrier back. Leave the state to focus on regulation and funding and allow the private sector to take on more responsibility for provision.”

In November, in its response to the competition review, the government announced it would commission a Productivity Commission review into human services, which will include research on ongoing reforms that incorporate choice and competition and identify sectors for more detailed analysis.

The government said reform to improve the efficiency and responsiveness of human services should also take account of issues such as social equity, particularly in regional and remote areas.

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