Paying for Outcomes

Let’s spend money more effectively to achieve better outcomes.

It is a myth that we need more money in order to create better outcomes for the majority of Australia’s social challenges.

The reality is, that more money will not automatically lead to better outcomes.

The real challenge is how we spend money more effectively to achieve better outcomes.

What if we used our resources much more strategically to fund better outcomes?
What if government purchased outcomes rather than just funding activities?

Most government funding focusses on addressing social issues and is distributed via competitive tendering processes. Government determines the policy, then devises strategies intended to deliver on the policy and divides the resources into funded programs that are then contracted out to service providers. It sounds logical and relatively simple.

However, there are some fundamental issues in the process that are preventing us from really addressing key social issues like youth unemployment. Often contracts can be detrimental to the cause at hand, in particular:

  • Contracts that specify particular activities and output – these often are set to demonstrate that ‘things are happening’. Whether these things lead to any real outcomes is rarely measured. Contracts make sure we are busy, but do not necessarily make sure we are doing what it takes to really achieve outcomes.
  • Contracts are not often built on resourcing ‘what works’ – in fact, in some complex social issues we don’t know ‘what works’ because we only collect data on what is happening or what we are doing, rather than what is working or what is effective in creating better outcomes.
  • Contracts that specify intervention timeframes – for example 12 weeks to support someone into housing, or 4 appointments of family support. These are usually focused on a single domain of a person’s life like housing, income support or employment, rather than recognising that people’s lives are more complex than this, and that support is often needed across several domains concurrently.

To solve this we need to think more strategically and look at changing contracts so that service providers are paid for outcomes and impact, rather than short-term, programmatic outputs.

The big idea here is not just an idea – it’s about action, and who needs to act in order to create the change.

Governments across Australia are looking at what is called ‘commissioning for outcomes’ – a strategic approach to designing, resourcing and delivering effective and efficient services. It focuses on clearly defined outcomes and ensuring that services respond to community and individual’s needs.

In many places this starts with conversations about defining outcomes – the outcomes framework has become a centerpiece for starting commissioning approaches. Measures are leading the change.

In reality however, what this means is that measures don’t actually change anything, they just tell us how much things have changed. Starting with measures is a bit like drawing a map without ever stepping into the territory.

What we have now is a situation where government buys a vehicle and the petrol, and specifies how many places the vehicle needs to visit, but does not specify a destination. So we have lots of contracted services driving around all over the place, but we don’t know if many or any, are ever reaching the destinations.

A driving metaphor is one thing, but when we are talking about whether contracts are actually making a difference in the lives of Australians who are doing it tough, then we need to take a stance and put forward a bold idea that can challenge this orthodoxy.

What if we started instead with the people for whom these outcomes will create better lives and opportunities?
And what if we started with understanding what it would take to achieve these better lives and opportunities?

In Queensland, we have taken the first steps to turn this big idea into reality, by working with the Community Services Industry Alliance to ask, ‘what would it take to deliver excellent outcomes for children and families if that’s what government commissioned’?

The results support the idea that it’s not about more money – funding has been increasing year on year for the past decade. It’s about government being much more bold and strategic in how it resources responses – but it’s also about how service providers organise, and how they engage with children and families to achieve real outcomes, through which children and families thrive.