Neo-liberalism is passé; a set of precepts promoted in the eighties that started failing as a government strategy by the early nineties. Often misleadingly called economic ‘rationalism’ in Australia, neo-liberalism dominated policy agendas just long enough to undermine the welfare state and the idea that the government was an appropriate provider of services. But both of its basic credos, the belief in choice and the free market, have long been undermined by governmental desires to retain control. While the rhetoric continues and is taken seriously by groups like the third sector (i.e. the community sector), our actual social policy frameworks have shifted to very illiberal models.

Those of us who are discontented with much of current policy making need to understand the basic values and assumptions that underpin current policy making if we want to make changes. We need to understand how ministers and shadow ministers conceptualise society and human nature. Do they believe that people need to be coerced into good behaviour? Do they want to use state powers to control many aspects of choice and behaviour? The conflicting viewpoints are illustrated in the recent and continuing lobbying by the community sector on the Welfare to Work changes. The serious clash of implicit values has reduced the effectiveness of the campaign. Asking Cabinet to be kinder to welfare recipients fails to recognise that the story in Cabinet’s mind is that they must be cruel to be kind. The sector is basically saying that these are decent people trying to do the right thing, while the Cabinet says these people need a firm hand to push them into correct behaviour because they want to do the wrong thing.

This disparity illustrates the values that underpin a wider set of policy assumptions and translate into essentially neo-conservative, not neo-liberal, ideological beliefs. What both ideologies share is a somewhat pessimistic view of human nature as self interested. The free market lot believe that greed creates wealth and it is not the role of the state to intervene if some fail to make it, while the neo-conservatives believe they have to police the processes to make sure that all contribute or are punished for their failures. Both use similar words in some contexts so we need to carefully extract these underlying assumptions if we want policies based on the idea that most people want to do the right thing, if they can.

The following article explores the beliefs that frame a lot of government funding and regulatory policies, showing the ways that free choice has become limited to approved choices. It will then explain that despite some persistent but outdated rhetoric, the devolution of the funding of many programs has now become a form of control, not freedom.

Choice, markets and the misuse of neo-liberal rhetoric

Choice is at the core of the market models of neo-liberalism but in practice, the current Federal government policies undermine consumer choices. Most of the government’s social funding is prescriptive and involves an authoritarian approach to purchasing services which denies choices to users and providers. The word choice is still found when describing programs that play into promoting conservative viewpoints on social institutions such as parenting and the use of certain types of services. To understand this set of changes, we need to understand the distortions of the concept of choice over the past forty years.

Liberation was a basic cry of the many social change movements of the sixties which covered those whose race/class/sexuality/gender constrained their life chances. They objected to having limited choices and demanded reforms of the institutional barriers and social prejudices which created collective inequalities, not just individual failures. The responses of the seventies were mainly state-based political and institutional changes that diminished formal barriers which were only part of the problem. Further government action was slowed by other political paradigms that were taking precedence. By 1980, there was a shift to Reaganomics/Thatcherism; market models based on neo-liberal individualism. The push for the liberation of groups was transformed into a drive to increase individual choices, for instance more women having access to high flying careers.

The areas where choice is still promoted mostly reveal a very particular and ideological use. A clear example is the Voluntary Student Union legislation which was payback destruction of student political action. Together with new controls over the staffing of universities, it was designed to punish universities, staff and students for their perceived political biases. Choice is used here to describe very illiberal interference with an organisation’s internal funding and charging policies.

The use of the term WorkChoices in the Industrial Relations reforms is similarly skewed, as the elimination of a level playing field means workers are faced with fewer freedoms to choose and employers are given more power. Underpinning the design is an explicit assumption drawn from some forms of liberalism – that all people are free to exert equal power and therefore workers need no protection (but oddly bosses do need to be protected from workers who choose to operate collectively). Similarly, the current design and subsidy of private health insurance diminishes choice by undermining the public health system. Penalising those who fail to take out private insurance through the tax system hardly allows people to make their own genuine market choice. In both cases the government tilts the playing field – and creates a few potholes – to achieve its intended ‘choices’.

More complex examples are those where combining ‘choice’ with ‘parent’ creates forms of behaviour that can be predictably manipulated. Reinforcing the pressure on parents to make the ‘right’ parental choice on schooling suggests that not taking up private school education options is a dereliction of duty. The pressure is on parents to make the right decision and the government uses funding modes to suggest those options that it would prefer them to take. Another example is income support payments for parenting. Income support payments financially favour particular traditional models of care for children where one parent is likely to ‘choose’ lower or non participation in paid work. Choice in these cases is tilted towards conservative outcomes.

The current child care payment model illustrates another misuse of ‘choice’. In this model, subsidies are paid to parents assuming that the mother/parent, as informed customer, will ensure the appropriate supply and quality of care. Regardless of evident market failure i.e. very limited services in many areas, variable quality and rising costs, the government insists that paying the bulk of their $3 billion funding to parents will force the market to provide. It ignores the evidence that the market is not operating in any effective way and is further distorted by the entry of large child care chains which compete with and undermine existing services and avoid areas with high land costs, despite demand. The prating of market ideology in this area suggests that the government is quite happy to reduce parental choices by maintaining queues and high costs which discourage many women from re-entering the workforce.

The additional effect of adding the word ‘choice’ to ‘mother’ pushes conservative, traditional buttons about good mothering, feeding doubts about using group forms of care which again reinforces the need for families to consider their risks and individualised family responsibilities. Choices that are not really there can be used to reinforce neo-conservative views about reducing families’ expectations and to deter expectations of publicly funded provision of care.

A similar emphasis on parental choices and responsibility is also reflected in some policy proposals for vouchers for education or services for those with disabilities, as another way of shifting more money away from organisations to parents. Again, using parental choice rhetoric shifts the risks from a collective responsibility shared by of all of us, via the state, to each individual family. This in turn leads to anxiety levels that make people vulnerable to governments offering strong authoritarian controls that reduce their concerns about the responsibilities they now feel are theirs alone. The rhetoric of choice is best seen as a stalking horse for the more common well controlled models of funding outlined below.

Controlling the masses

The role of governments was diminished in the eighties and power was handed to markets as tokens of theoretical faith in Adam Smith’s hidden hand. For a decade or more, this approach dominated economic policy and crept into other policy areas as governments divested themselves of direct service delivery and privatised the public sphere. However, the continued retreat of the state was soon to be undermined by those who wanted to retain central power and who felt that too much freedom undermined social order. Two decades later, the market-based revolution has stalled and been reversed in many areas of government funding. Competition is often highly controlled by government, despite efforts by the ACCC. So even though market power may be quoted in some debates, it is often not functionally present.

A key indicator is the size of this government, which is one of larger ones on record both financially and in the breadth of control and regulation. It no longer delivers many services but uses the funding of programs to control the operations of a wide range of organisations. This service- purchase model allows the government both to favour friendly private corporations and to require compliance and complicity from funded third sector organisations. Through the use of very specific contracts and the demand for excessive bureaucratic accountability, it has massively increased centralised control over a wide range of organisations. It has silenced many of its critics and undermined the independence of the third sector. Together with increasing Federal grabs for state responsibilities, this government is the most centralist in living memory. These characteristics are the antithesis of both economic and political liberalism and can best be described as neo-conservative authoritarianism.

Many Federal government contracts now prescribe in fine detail how organisations and people should act and what they can and can’t do. Areas like employment, resettlement services, and aged care facilities bid for funding and sign complex contracts. Part of the grab for control comes from the misuse of fear, as Carmen Lawrence has outlined recently in her new book. Invoking national loyalty and security threats, and moralising about people on welfare, the government distributes its funding prescriptively to support its ideological commitments to certain values and behaviours. This is illustrated in requirements for compliance in displaying flagpoles in public schools, the Work to Welfare policies and aspects of the Industrial Relations changes.

The bulk of Government funding for community services is now delivered through purchasing outsourced services, often through competitive bidding by both commercial and not for profit organisations. These transactions involve control through highly detailed (Taylorised) contracts which assume that both one size fits all and the government has best practice know how. This model has retained minor aspects of the market, but even the tendering process is often confused by criteria that have little to do with price or effectiveness. This approach kills competition by undermining variety and diversity in community services, devaluing experience and local connections by imposing a one size fits all model of delivery by outputs. This cannot in any way be seen as ‘economically rational’.

Understanding that markets are no longer dominant, but a small part of the rhetoric used to obtain control over the unruly masses, gives us an understanding of current rhetoric and the ability to look for alternatives. Many on the left failed to distinguish between the different forces on the right and took as gospel that neo-liberal economics can be matched with social neo-conservatism. Recognising the inherent contradictions between these frameworks allow us to seek alternatives and abandon attempts to make their versions of markets serve social needs.

Some starting points

The attempt to counter to these moves in community services should start by re-examining the economic and social advantages of new forms of collective risk-sharing. We need to reinvent the idea of quality, funded, public services which reduce private risk and anxieties. Given both the changes in popular views over the past two decades and the earlier failures of many centralised planning and control models, we need to invent new paradigms based on devolving much power and control to localities, services and users (subsidiarity). This requires that we rethink how governments can facilitate good services by setting limited and judicious controls which encourage innovation and diversity but preserve quality.

We need to recognise the differing roles of community sector groups and work on ways of ensuring that they retain their independence and have their skills recognised. As voices for those not well served by governments, they need to retain the capacity to be critics and not turned into surrogate servants of government.

We need to rethink the massive increases in paperwork that the accountability mantra has generated, by setting up models for new collaborative, productive partnerships which recognise power differentials. Governments need to fund services, as well as parents or users, so that much of the responsibility for quality, distribution and accessibility is taken by the funding body, not left to the ‘consumer’.

A new model for government funding in the child care area, for example, would be to partially fund centres directly, and in return require capped fees, better distribution of services and agreed qualities of care. Those who are still hooked on markets may see this as too radical a change from current (dysfunctional) models. This view, however, represents a failure to recognise that our dominant mode of policy making is no longer about markets but control, no longer neo-liberal but neo-conservative. Once this issue is clear we can have a healthy debate on new funding models.