Neave, Marcia --- "Report No 42 - Opening Speech at the Launch of the Report" [1999] AdminRw 2; (1999) 51 Admin Review 3

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OPENING SPEECH AT THE LAUNCH OF THE REPORT

Professor Marcia Neave AO^[*]

Distinguished guests, ladies and gentlemen, I am delighted to welcome you to this launch of the Administrative Review Council's Report on The Contracting Out of Government Services.

There have been dramatic changes in government administration over the past ten years. Both Australian and overseas governments are moving away from direct service provision, towards funding the provision of services by corporatised entities or by private contractors. At Commonwealth and State levels, the services provided by contractors to members of the public and paid for by government range from debt collection to the provision of utilities such as gas and electricity to the provision of human services - for example, job placement and rehabilitation services.

In Australia, the relationship between the Commonwealth Government and individual members of the community, is regulated by administrative law. Our package of reforms, which was introduced during the 1970s, is regarded as a model by many overseas commentators. Commonwealth administrative law has influenced law at the State level as well. Many elements of the Commonwealth administrative law system - for example, an independent Ombudsman to investigate claims of maladministration by government, and freedom of information legislation which gives the public broad rights of access to government documents - have been adopted by most State governments.

The administrative law system has three important objectives. First, it gives individuals redress if they are affected by incorrect decisions or wrongful government action. Secondly, by providing a means of correcting decisions it helps to improve the quality and effectiveness of government administration. Finally, it is an important means of ensuring the accountability of government to its citizens.

Although the 1970s reforms show that Australia takes administrative justice and government accountability seriously, they were not designed to deal with the new forms of administration which have begun to emerge today. Contracting out blurs the distinction between the public and the private sector, creating new relationships between government, citizen and private sector contractor. The existing administrative law package was not designed to deal with these relationships and cannot provide adequate remedies for citizens in this context. Similarly the private law remedies that have traditionally applied in the market place are inadequate to ensure the accountability of government and private sector providers in the contracting out situation, when the government pays for contractors to deliver services to the public.

Let me illustrate the problem. Suppose that, as a result of an administrative mistake, an individual is denied access to a service or a benefit to which he or she is entitled under the law. Generally, that person can have the decision reviewed by an independent tribunal. Similarly, if a person has a complaint about maladministration of a government program, they can obtain access to information held by the government department and can also complain to the Ombudsman. These remedies allow individuals to correct administrative mistakes and test the lawfulness and merits of decisions affecting them. They also enable the identification of systemic problems, thus improving the quality of administration.

By contrast, if the decision is made, or the service provided by a contractor under a purchaser/provider arrangement, none of these administrative law remedies may be available. An individual with a complaint about the quality of the service may have no private law remedies either, because normally there will be no contractual relationship between the individual and the service provider. The individual may not be able to take the matter to a small claims tribunal or an industry body, because the contractor's primary relationship is with the agency purchasing its services. In some cases the government department or agency may be prepared to help the individual solve the problem, but there is the possibility that both the contractor and the agency may deny responsibility for it and 'pass the buck' Thus, contracting out can result in service recipients falling into a gap between administrative law and private law, so that there may be no effective remedies available to them.

It is this problem that the report on The Contracting Out of Government Services attempts to address.

So far as I know, there has been no other report systematically examining these issues in any other common law country. For this reason, our project has generated great interest, both in Australia and from overseas.

The Report is based on two fundamental principles:

• the government should retain accountability in relation to services it pays contractors to provide to third parties; and

• contracting out should not reduce the rights of members of the public to seek redress if they have been affected by the actions of a contractor.

I will not speak in detail about how we give effect to these principles, but let me mention three important areas.

First, the Report looks at the agencies' obligation in relation to drafting, management and monitoring contracts. Getting the contract right is an important means of ensuring government accountability and giving remedies to individuals.

Secondly, the Report deals with the kinds of complaint handling procedures that need to be established and recommends that the Ombudsman should be able to investigate complaints about contractors.

Thirdly, the Report makes recommendations for changes to laws dealing with access to information. These are designed to ensure that information is not removed from the public domain simply because of contracting out.

Australians are renowned for our inventiveness. This extends beyond the invention of things, such as the stump-jump plough, to legal reforms like the Torrens system of land and the administrative law system. Contracting out provides new challenges for government and law. In this Report we seek to respond to that challenge, by providing a fair, efficient and cost-effective system for maintaining government accountability and providing justice to individuals.

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^[*]Immediate past President, Administrative Review Council