The UK and Western Australian Local Government Relationship towards Non-Profit Organization - Essay Example

Differences between the UK and Western Australian Local Government Relationship towards Non-Profit Organisation Name: Subject & Code: Tutor: Date: Introduction Majority of third sector organisations in Western Australia and UK are under some form of publicly-funded peak bodies or umbrella organisations through the local government (Lyons & Passey, 2006). Although the roles of these non-for-profit organisations vary, they all participate in forms of advocacy of political lobbying for their client-groups or member organisations (ABS, 1999). Many of these non-for-profit organisations are today closely involved in the policy-making processes due to their proactive political actions on the state or the local government’s use of a range of consultative mechanisms to engage them in policing their respective fields of community service provision (ICNL, 2008). Western Australia and UK’s welfare state development and infrastructure is unique and dependent on social, historical, economic and cultural imperatives. This paper compares the differences between the Western Australian and UK local government relationship towards non-for-profit organizations. It is argued that unlike Australia, a major outcome of the UK public sector reform processes in Western Australia is the creation of a leaner public sector, where focus is on policy management and development of community services, rather than on development of quantifying outcome and output measurements. Local and state governments in Western Australia can benefit from emulating the UK’s challenges and strengths, in relation to working with non-for-profit groups in delivering community services. Background Before examining the differences between the UK and Western Australian local government relationship towards non-for-profit organisations, it is essential to examine the differences between Australian and UK (ABS, 1999). It should first be noted that the state governments are non-existent in the UK. In Australia, the local government is the lowest government tier that is administered under the territory and state government, which are themselves under the federal government tier. Although the local government remains unmentioned in the Constitution of Australia, local government is recognised by the state in their specific constitution (ICNL, 2008). Additionally, the UK national government devolves the responsibility and funding for delivery of community services to the local government, although it is not obliged constitutionally to negotiate with them in case of a need to change the manner in which the services are delivered (ICNL, 2008). On the other hand, the Western Australian federal government tends to deliver some public services directly and will in many circumstances negotiate with the state government through its greater access to tax revenue, as its bargaining weapon, if it has to influence service delivery. Next, the total UK government spending is much greater than that of the Australian or Western Australian government. For instance, during David Cameron’s election, the UK government’s expenditure was approximately 47 percent of the annual gross-domestic product (GDP) compared to that of Australia that was 35 percent over the same period (Whelan, 2012). Third, the economic circumstances of Australia and UK are quite different. For instance, budget cuts in the UK are structured as ‘measures of austerity’ and are aimed at reducing the deficit of £245 billion within a five-year period. The UK had a net debt of 69 percent of its GDP in 2010 while Australia had 5.5 percent. Hence, Australia has a stronger economic position (ICNL, 2008). The Roles of non-for-profit organization The roles of the non-for-profit organisations are similar in both UK and Western Australia. Similar to the UK, most non-profit organisations in the Western Australian community sector are under an umbrella organisation or peak body. The Western Australian peak bodies are either established by an interest group of the state as a vehicle for carrying policy and for communicating with a set of service providers (ABS, 1999). As far back as the 1970s, the Western Australian government has acknowledged the legitimacy of non-profit organizations to shape social policy through public funding of the groups. As a rule, these organisations are mainly concerned with information dissemination and advocacy. However, the term peak organisation is not commonly used in the UK. Rather, these non-profit organisations are normally referred as umbrella groups, advocacy groups, intermediaries or federations (ICNL 2008). Administrative Reform Agendas Western Australia, like the UK, has witnessed a number of local government and public sector reforms over the past two decades. In the two jurisdictions, pressure has mounted on the need to reduce government expenditure while at the same time there has been the need to restructure state bureaucracies (ICNL, 2008). A large body Australian literature has provided an analysis of the varied competing economic and ideological imperatives that underlie a bulk of these reforms. Like the UK reform agendas, the Western Australian ones are not part of a uniform set of concepts. Rather, they are a conglomeration of varied and usually conflicting belief systems (Milbourne & Cushman, 2012; ICNL, 2008). In Western Australia, such sets of ideologies have been dubbed corporate managerialism, ‘economic rationalism’ and New Public Management (ICNL, 2008). Reform outcomes Unlike Australia, a major outcome of the UK public sector reform processes in Western Australia is the creation of a leaner public sector, where focus is on policy management and development of community services rather than on development of quantifying outcome and output measurements (ICNL, 2008). An additional outcome in the UK has been the shift to contract culture, as well as mounting emphasis on application of ‘market type’ mechanisms in delivery of community services. In a number of instances, more legalistic funding agreements, known as contracts, and applications of varied forms of contracting has resulted, including competitive tendering for community services (Chappell, 2008). In the same case, this had led to the introduction of a range of funding arrangements anchored in the ‘unit cost’ principle. The same has been experienced in Western Australia. In which case, the funding is meant only for the clearly defined yet measurable ‘outcomes and outputs’ for the non-for-profit organisations, on individual community service use basis. However, unlike Western Australia, this type of funding model replaced the traditional input-based one, which consisted of allocation public funds to specific organisation to offer community services (ICNL 2008). Welfare state social model Relative to Western Australia, the UK developed a comprehensive welfare state social model based on the blueprint detailed out by Beveridge in 1994. The model was anchored in universal provision despite the income levels, education or personal care services. A majority of the community services were generated, allocated and delivered using bureaucratic mechanisms that included statutory authorities and local government authority networks. At the same time, the charitable and voluntary sector supplemented the state provision (Chappell, 2008; Milbourne & Cushman, 2012). Benefits The key feature of the Western Australian approach to non-for-profit organisation and community service provision has been the creation of a charitable fiscal and occupational benefits for workers drawn from participation in the paid labour force that diluted the need for expansion of state services, hence the adoption of the term ‘working man’s welfare state’ in reference to the Western Australian approach (Flack & Ryan, 2005). In contrast to the UK, the state welfare expansion in Western Australia took place in the early 1970s. At the time, the state expanded the non-for-profit organisations entrusted with provision of community services. The period also marked substantial increase in the financial support for nongovernment community services (Flack & Ryan, 2005). This reflected that of the entire Australia where some 47,000 organisations were set up between 1970 and 1972. As cited by ICNL (2004), the ABS statistics in a survey in 1997 showed that the community service sector has an annual turnover of $10 billion, with at least $5 billion of the revenue originating directly from the local government funding (ICNL, 2008). Community policing Another major difference between Western Australia and the UK is the ways in which the politics of community service are caught in the system of federalism. Here, the Western Australian government held back sizeable powers under the Australian constitutions. The Western Australian state also controls the budget and development of local government. Hence, all the three levels of governance take part in making policies concerned with the delivery of community services (Anheier, 2000). Contracting public service delivery Although it is claimed to be a rather recent phenomenon in both Western Australia and UK, the key administrative mechanisms applied in dispersing funds is through contracting and purchase of the services by the local government. Non-for-profit organisations grew radically in the 1990s because of the contracting of services initially directly delivered by the UK government agencies (Whelan, 2012). The change specifically impacts social services, commonly referred as community services. Just as in the UK, when the non-for-profit organisations enter into a contract or a service agreement with the local government for funding, the measure of the community services that have to be delivered and the mechanism of financial accountability have to be specified (Flack & Ryan, 2005). Additionally, compared to Western Australia, the organisational overheads that are associated with the services are not funded. UK's challenges and success Big Society Concept: Shift towards service delivery by corporations Unlike Australia, community service delivery in the UK has shifted from non-for-profit organisations to corporations. The shift came about in 2010 during Prime Minister David Cameron’s government. The UK government, under David Cameron, cut public spending through its ‘Big Society’ policy’ that has largely been criticised for posing as a way of shrinking the government, through reduced budgets, outsourcing and privatisation. The ‘Big Society’ ideology was widely used by David Cameron in 2010. The ideology that underlies the concept was echoed by former UK Prime Minister Margaret Thatcher’s unrelenting denunciation of the welfare state. The ideology appeals to the assertion that people have the moral obligation to take on voluntary activity in the community service delivery (Anheier, 2000). Unlike Western Australia where the concept is yet to materialises, changes proposed by the Big Society ideology in the UK have expanded the role of corporations in providing community services. Through the process of commissioning community services to willing service providers, the UK government has been able to contract corporations to engage in delivery of varied services that were initially administered by non-for-profit organisations. This has been based on the belief that businesses are inherently more effective and efficient, compared to the public sector organisations (Department of Social Service, 2014). This clearly indicates that UK government’s relationship with non-for-profit organisations has not been intimate as compared to Western Australia. Despite this, funding for non-for-profit organisations has also decreased in Australia (Figure 1). In 2007, some 2047 non-for-profit organisations provided community services in Australia and employed 22,485 people. The industry value of the organisations was estimated at $1.5 billion. The main sources of income were membership fees rather than local government or federal funding, accounting for 51.5 percent of $2 billion of total income. Government funding comprised only 6.4 percent of 0.2 billion (ABS, 2009). Figure 1: Sources of Income for non-for-profit organisations (ABS, 2009). The Big Society concept has, however, been confronted with daring challenges. The Cameron government that was largely associated with the Big Society promoted the ideology that funding more complex range of serviced providers, such as new hybrid kinds of service delivery organisations is a great challenge. At the same time, existing corporations dominate the outsourcing processes. Despite enthusiasm showed by Cameron and his Ministers for social investment and philanthropy, such alternative revenue streams proposed by the Big Society have not been able to feel the gap left by withdrawal of the government (Whelan, 2012).. The changes have concurred with two national budgets that have reduced funding for the public sector. This has resulted to reduced local government budgets. Funding for community service delivery through non-for-profit organisations has also been reduced. The Big Society ideology lacks in Western Australia, which however needs such kind of thinking. Indeed, support for Big Society have been proposed as effective for driving change in community service delivery in Australia. According to Whelan (2012), Big Society allows the community groups and citizens to reduce their dependence on the state by practicing self-direction and responsibility. Despite this, the idea of the Big Society has been condemned by community leaders for their negative consequences on the voluntary sector. In Western Australia, as in UK, the non-for-profit organisations play a critical role in the lives of the community. The changes proposed by the Cameron government presuppose that community members are ready to devote much of their time and resources in providing the services that was initially provided by non-for-profit organisations and public servants (Whelan, 2012).. The Big Society concept promotes citizen empowerment, diversity, co-production and community autonomy, while at the same time executing changes that shift public wealth to the corporations rather than non-for-profit organisations. In which case, it disempowered non-for-profit organisations and undermined public sector (Department of Social Service, 2014). However, UK’s Big Society has triggered much criticisms as well as triggered social movements due to its weaknesses. This is since it cuts public funding for community services. For instance, Cameron’s initial budget that incorporate the Big Society concept consisted of an £81 billion slash in public funding over four years. This included 19 percent budget slash to government agencies and £7 billion slash to community service delivery (Gilmour, 2007). Emulation of UK-Style Local and state governments in Western Australia can benefit from emulating the UK’s challenges in relation to working with non-for-profit groups in delivering community services (Lyons & Passey, 2006). The Big Society concept will encourage charities and businesses in Western Australia to play a significant role in provision of community services. This is based on the premise that the state as an entity should not deliver community services unless it is compelling (Gilmour, 2007). Rather, the community services should be open to non-government providers in a bid to do away with state monopoly in providing services such as libraries, parks, employment, prisons and housing. Additionally, it will cause a major cultural change in Western Australia where citizens would no longer have to depend on the state for answers. Rather, they would feel empowered to assist their communities and themselves. As observed by Whelan (2012), this has the potential to bring more social unity in a state, in this case Western Australia. Barker (2012) stated that the UK concept is critical for ending the state domination of civil society. This would encourage more democracy in Western Australia. Emulating UK’s ideology will also allow Western Australia to end the overwhelming bureaucracies associated with the state monopoly. What it means for Western Australia is that it would be a means that empowers the citizenry to reclaim duties taken away by the overwhelming state bureaucracies, which normally end up in poor service delivery (Whelan, 2012). Conclusion Unlike Australia, a major outcome of the UK public sector reform processes in Western Australia is the creation of a leaner public sector, through the Big Society ideology, where focus is on policy management and development of community services, rather than on development of quantifying outcome and output measurements. The roles of the non-for-profit organisations in delivering community are similar in both UK and Western Australia. Similar to the UK, most non-profit organisations in the Western Australian community sector are under an umbrella organisation or peak body. In the two jurisdictions, pressure has mounted on the need to reduce government expenditure while at the same time there has been the need to restructure state bureaucracies. In UK, although it is claimed to be a rather recent phenomenon in both Western Australia and UK, the key administrative mechanisms applied in dispersing funds is through contracting and purchase of the services by the local government. Local and state governments in Western Australia can benefit from emulating the UK’s achievements. UK’s Big Society concept will encourage charities and businesses in Western Australia to play a significant role in provision of community services by ending state monopoly. Additionally, it will cause a major cultural change in Western Australia where citizens would no longer have to depend on the state for services. UK concept is critical for ending the state domination and encouraging more democracy in Western Australia. Emulating UK’s ideology will also allow Western Australia to end the overwhelming bureaucracies associated with the state monopoly. References ABS. (1999). Australia's Nonprofit Sector. Retrieved from Australian Bureaus of Statistics website ABS. (2009). Business and Professional Associations, Unions. Retrieved from Australian Bureau if Statistics website: Anheier, H. (2000). Managing non-profit organisations: Towards a new approach. Civil Society Working Paper 1 2000 Barker, M. (2012). Big Society Charity: Capitalist Philanthropy in the UK. State of the Nature. Retrieved: Chappell, B. (2008). A Strategic Management Framework for Volunteer Engagement in Local Government. Local Government Community Managers Group Department of Social Service. (2014). Relationship matters: not-for-profit community organisations and corporate community investment. Retrieved from Australian Government website Flack, T. & Ryan, C. (2005). Financial Reporting by Australian Nonprofit Organisations: Dilemmas Posed by Government Funders. Australian Journal of Public Administration 64(3):pp. 69-77. Gilmour, T. (2007). Same or Different? Towards a Typology of Non-profit Housing Organisations. 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