The Efficiency through Contestability Programme
This fact sheet provides an overview
of the Australian Government’s
Efficiency through Contestability
Programme.
In the 2014-15 Budget, the Australian
Government introduced a Commonwealthwide Contestability Framework to be
applied by way of the Efficiency through
Contestability Programme (the Programme)
led by the Department of Finance.
The Contestability Framework will be used
to assess whether a government function
should be open to competition and to
determine the appropriate means for this to
occur. By applying the Contestability
Framework to guide its planning and
operations, the Commonwealth public
sector is expected to constantly improve its
performance and efficiency so it achieves
better outcomes for the Australian
community.
The Contestability Programme
The Contestability Programme aims to
ensure Commonwealth Government
functions are undertaken by the
organisations able to do so most efficiently,
and that the performance of these
organisations continues to improve. By
exposing public sector functions to the
prospect of competition over time, the
government expects to see better outcomes
for citizens and greater value for public
money.
While government entities may have initially
been delivering their functions both
efficiently and effectively, over time with
new Budget measures and a constantly
evolving environment, this may no longer be
the case for functions, or elements of
functions provided. Looking at functions
with contestability in mind provides an
opportunity to consider:
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what role should the government have
how functions align to government
priorities
how to best achieve a function’s intended
effect
who is best placed to undertake a
function
how to encourage entities to continue to
improve the efficiency and delivery of
the function, through the possibility of
competition.
Through the programme, entities will
benchmark their performance against
market best practice and explore alternative
approaches to improve their efficiency. In
most cases, there will be a range of
alternative approaches to consider – from
improving current processes, to partnering
with, or outsourcing functions to other
organisations.
What is Contestability?
The prospect of competition in public sector
activities to motivate efficiency and performance
improvements in policy, programme and service
delivery.
The Spectrum of Contestability
Many people incorrectly presume that
contestability and competition equates with
outsourcing. However, contestability is
based on research and experience which
shows that even the credible threat of
competition from potential providers is
sufficient to motivate public sector
providers to perform better – at potentially
a lower cost.
Within contestability there are a range of
alternative approaches, including
cooperative and competitive arrangements,
to consider and pursue. Contestability
approaches range from improving internal
processes; partnering with, or transferring
functions to other organisations inside or
outside of government; through to
fundamentally restructuring how the
function is achieved.
Spectrum of Contestability
Approaches
System Improvement
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Engagement Improvement
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The Evolving Role of Government
The role of government is changing from a
time when a government entity was solely
responsible for the design and delivery of
the services it was responsible for.
Increasingly, governments are adopting
‘hybrid’ delivery models with greater
involvement from other service providers
drawn from other levels of government
(including state and local government) and
the private and not-for-profit sectors.
Adapting to the new service delivery models
available requires a shift in the
government’s traditional role of funder and
provider (or procurer) of services, to a new
role as co-designer and regulator of a
transaction environment between clients,
government, and service providers. It is
recognised that changing to new models
involving cross-sector arrangements may
require new regulatory and policy
structures.
Improve structures e.g. flatter, less
hierarchical structures, shared service
arrangements
Improve processes e.g. streamline
reporting requirements, joined up
government
Improve requirements e.g. reduce
unnecessary red tape/regulations
Improve products or services e.g. adopt
user-centric design, move to digital
solutions available 24/7
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Improved government relations e.g.
shared footprint, integrated services
Improved contractual practices e.g.
payment by outcomes
Innovative public investment strategies
e.g. social investment bonds
Develop behavioural and policy
incentives to promote higher compliance
or take-up of government initiatives
Market Improvement
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Build a market
Partner with others e.g. Public Private
Partnerships, cross-sectoral alliances
Government Business Enterprise
Mutualise
Privatise
Outsource
For more information about the
Contestability Programme
W: http://www.finance.gov.au/resourcemanagement/governance/contestability/
E: contestability@finance.gov.au
T: 02 6215 2991