After all the focus on how the care economy is smashing Australia’s productivity in recent months, the Productivity Commission’s interim report on more efficient delivery of caring services might seem like a damp squib. But it delivers a reality check to the blowhards who insist that if only the government stopped crowding out the private sector by investing in fake caring jobs, all would be well.
For starters, the PC makes a point overlooked when commentators and economists queue up to bash the productivity of the labour-intensive care economy: what we’re really interested in is the quality of the services delivered by the care economy, not the outputs: “multifactor productivity in the hospital sector grew on average by just 0.1% per year between 2008-09 and 2018-19, below the average of 0.7% growth per year in the market sector,” the PC says. “Yet, over time, the quality of some care and associated patient outcomes has improved significantly.”
For example, when adjusted for quality, productivity growth for a subset of the healthcare sector – accounting for about one third of healthcare spending – actually outpaced the broader economy, growing by about 3% per year between 2011-12 and 2017-18
To put it another way, “Australians are getting better outcomes, but not necessarily more care services, per dollar spent.” That suggests that part of the “productivity crisis” caused by the growth of the care economy is in the way we think about productivity, not in the care economy. Unless, that is, you’d prefer to be treated for cancer in 1995 rather than now.
But that’s kinda lucky, because the PC really doesn’t have much excitement to offer in terms of improving productivity in the care economy. It recommends a greater focus on and investment in prevention in health, a trope so old that there are ancient Babylonian tablets that detail the healthcare savings to be achieved from people leading healthier lifestyles.
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It also proposes a more joined-up approach to the planning, procurement and evaluation of caring services in local areas, starting initially with local hospital networks, primary health networks, and Aboriginal community-controlled health organisations, who would work much more closely together to address caring needs.
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The proposal that will likely have the most impact regards regulation: the PC wants a far more unitary system of accreditation, safety and quality regulation operating right across the care economy — especially in aged care, disability and veterans’ care services, which share many features and providers.
While some unifying efforts have been made since 2020, the PC proposes a six-year pathway to a single worker and provider assessment process, a single system for registration and audits, a single AI regulation policy across caring sectors, regulatory alignment where possible and, perhaps, a single regulator.
It’s deeply unglamorous stuff. There’s no four-day week, or big tax reform, or major government investment. But if it’s achieved, it will deliver material wins and lower costs for caring service providers.
However, it’s also susceptible to political intervention. The moment a more unified regulatory framework or regulator is perceived to have failed, the pressure will be on from the media and the public, and therefore politicians, to re-fragment the system and return to bespoke regulation and interventions. Just look at the reactions from horrified parents to revelations about failings in the existing, fairly shabby childcare regulatory framework.
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But this is the space that employs people who are serious about productivity. While op-ed writers and economists issue demands for big-picture, generational reforms and lament the timidity of politicians, the hard work is under the hood of individual sectors — getting regulatory and funding systems to work better in ways that deliver efficiencies small in scale but which, when added up, represent a meaningful reduction in costs without affecting quality of care.
Sure, you could get robots to lift efficiency. “New technologies, however, offer scope to unleash large gains to labour productivity while also improving quality of care and lowering costs,” the PC says. But when you read what its authors actually have in mind, the large gains “unleashed” look rather limited: “AI scribes can reduce time workers spend on reporting, while robots can perform routine tasks such as vitals monitoring and logistics.” Wow.
That didn’t stop the Financial Review — where the care economy is a vast monster that must be cast into gloomy pits of darkness — from declaring: “Robots could unleash big gains in the care economy”. But the visions conjured of all those pesky female care workers being replaced by far more efficient machines are unlikely to entrance too many parents, or people with disabilities, or veterans, and might not even survive the first robot vitals monitor being hacked and made to ignore an expiring patient.
What’s the alternative? Cut investment in healthcare and aged care and disability care and childcare? Have a US-style health system, go back to kero baths for seniors, leave Australians with disabilities to fend for themselves, and dispatch women back home to look after the kids? Wouldn’t that do wonders for productivity.