Learning to love (the state) again? Money, legitimacy and community sector politics.

Introduction

It seems that nobody loves the welfare state any more. Restructuring, social change and economic reform have undermined the previous consensus on the state's role in delivering welfare, while critiques from both right and left have permanently damaged its legitimacy. Currently, organisations in the not-for-profit non-government community services sector ('the community sector') are the main agents of the shift away from centralised delivery and responsibility. In this paper I discuss the dilemmas of those organisations seeking to legitimise their role in welfare delivery while at the same time relying on traditional sources of welfare state funding.

Existing accounts of trends within welfare delivery have failed adequately to incorporate the perspectives of the community sector. On the other hand, lobbying by community sector organisations often lacks a cohesive theoretical perspective on the trends of which they are part. In this paper I use Australian examples to explore how non-government community service organisations, in seeking to ensure their own financial viability, have had to rely on statist models of collective responsibility for social welfare, despite the problematic implication of these for organisations' independence.

The arguments used by community service organisations to claim funding include: the ethical responsibility of society to direct funding to services for the disadvantaged, via those organisations providing the most appropriate and consumer-controlled services; the desirability of government investment in a growing industry with high social benefits; and the legitimacy of community organisations as directly accountable to the public (rather than to government) for the delivery of services that return benefits to the community that contributed taxes for them. These arguments represent different critiques of government's legitimacy, while at the same time relying (not always explicitly) on a conception of government as embodying collective responsibility for welfare. The contradictions between these different elements of community sector claims-making lead to consideration of the viability of a non-statist model of social welfare.

Context and definitions

To explain why the claims of community organisations for funding are significant, it is first necessary to describe the political context of these claims. Most importantly, the recent decades of economic and social reform have ensured that the role and structure of the welfare state, along with associated notions of citizenship and social rights, are vigorously contested. As described by Mitchell, the Australian post-war welfare state was characterised by consensus on four basic features: economic protectionism, full employment for male breadwinners, centralised wage fixing and the provision of unpaid care by women (Mitchell 2001). The erosion and dismantling of this settlement has entailed an expanded role for the community sector, as a complex 'mixed economy of service provision' has developed (McDonald and Marston 2002a: 378). At the same time, the process of dismantling the post-war settlement has been facilitated by political movements that challenge the concept of social rights, particularly when viewed as a right to public welfare support. Some of the critical and normative arguments about this process, and the role of the community sector in it, are canvassed below. First, however, it is necessary, to outline what is meant by 'the community sector' and how it relates to the field of welfare as a whole.

The sector under consideration in this paper is the non-government not-for-profit community services sector, called by many 'the community sector'. This definition encompasses both the activities undertaken by organisations (community services such as youth outreach, disability support services, migrant women's advocacy and drug and alcohol counseling) and their structural location and self-regulatory principles (non-government not-for-profit).

The community sector comprises an identifiable group of organisations performing service and advocacy work, often with government funding, for people who are vulnerable or are living in poverty and disadvantage. Despite their similarities, community sector organisations vary greatly in philosophy, size and in the amount and mix of sources of their funding. "While religious organisations have an undeniably contentious role, in this paper I concentrate on questions of viability and independence for the sector as a whole.

This sector described here is different from 'the private sector' as it excludes for-profit enterprises. Increasing private sector provision is a separate but important current issue (see Meagher 2004), which highlights the imperative for community sector organisations to distinguish themselves from for-profit human service bodies as well as from government. The community sector is also more specific than "the third sector,' a term used to describe voluntary and associational life outside the market and the state. While the third sector includes sporting and cultural activities, the sector described here is limited to services and advocacy intended to address disadvantage. The emphasis of third sector literature on individuals' involvement in voluntary associational activities limits the usefulness of the concept in analysing the financial and employment issues that are so pressing for many government-funded community sector organisations. In this way the concept of a 'third sector' gives inadequate weight to the structural changes in the welfare state that have promoted the proliferation of non-government community services. Similar criticisms may be made about the term 'civil society', which is even less clearly defined and at times is used to describe the activities of private businesses as well as voluntary associations (Kamat 2004: 165).

Finally, while the term 'charities' is widely used, it is not appropriate for the purposes of this paper. In contrast to the common image of charities, many of the organisations under consideration here operate with negligible or no private donations, relying instead on government funding and, to a much lesser extent, membership dues. Gabrielle Meagher (2004) has noted the likely disjunction between the complex 'mixed economy' of service delivery and the public perception of a not-for-profit sector operating on a gift basis. This disjunction contributes greatly to the confusion and conflict described below in the community sector's attempts to gain viable levels of funding.

As Billis points out, two important themes in the academic literature have been arguments for the 'distinctive function, attributes and societal role' of the community sector and arguments that locate the sector in a 'growing mixed economy of care' in which there is increasing interdependence between it and the public and private sectors (1993:242). Discussing the tension between these approaches from a UK perspective, Billis observes that the sector,

   notwithstanding its diversity, has a strong internal sense of
   history and identity. Moreover, it is regarded as a sector
   by ... governments that have policies vis-a-vis the sector.
   However, the changes caused by contracting and the creation of new
   organizational forms are likely to bring the question of blurring
   increasingly to the fore (247).

Billis identifies four 'worlds,' each with its own rules and structures, within which social problems are addressed: government, private (business) agencies, associations, and the personal or informal sector (1993: 249). He argues that there are 'zones of overlap" between these sectors, resulting in 'structural ambiguity,' which is particularly noticeable in nonprofit agencies with both associational and bureaucratic elements. Billis and Glennerster (1998) further argue that structural ambiguity, while posing problems for organisations, also constitutes a 'comparative advantage' for the sector: an advantage that may be eroded by the adoption of more bureaucratic and business-like structures, under the influence of contracting regimes.

Billis and Glennerster's concept of comparative advantage could be a useful argument in favour of better government support for 'sector viability' and an argument against the forced 'bureaucratisation' of community organisations under funding contracts. In terms of its usefulness in political advocacy, this argument would need to be underpinned by shared understandings about the legitimacy of publicly funded welfare in general, and particularly about government's responsibility to support other sectors in the mixed economy of welfare. There is not yet, however, a widely-accepted understanding of the appropriate role of the community sector, or government, in the mixed economy of welfare. The challenge for organisations dependent on government funding is therefore not only to maintain their associational characteristics in the face of 'sector blurring' but also to frame their claims to government funding in terms of a coherent view of each sector's roles and legitimacy. As this paper demonstrates, the mobilisation of such a coherent view is both a necessary and a deeply problematic process for community organisations.

Arguments about the welfare state and community sector

In making claims to protect their independence and viability, community sector actors must engage in political debates about the changing welfare state and their own role in the emerging regime. In doing so, they face a complex and uncertain political landscape. This section outlines some of the major arguments about the welfare state and community sector, highlighting the possibilities and risks invoked by visions of a 'non-state public sector' for welfare.

Tony Fitzpatrick (2002) has described how neoliberal challenges from the right and anti-universalist challenges from the left have combined to leave defenders of the welfare state 'battered and bruised' (159). Neoliberalism, as a doctrine committed to small government and market solutions, has been strident in its criticism of the post-war welfare state, accusing it of crippling individual initiative and stultifying economic growth. While the implementation of welfare reforms has certainly not conformed to a strict neoliberal model, the neoliberal critique has provided theoretical fuel for extensive restructuring and the removal of entitlements, in conjunction with the more pragmatic principles of New Public Management.

Anti-universalist challenges from the left, by contrast, advocate a fairer distribution of power and money, but question the ability, or interest of the state in making fundamental changes to this end. In this view, the welfare state's claims to legitimacy, based on the promise of entitlements and a presumption of competence in delivering these entitlements, have been fatally undermined by critiques that highlight the structural disadvantage of various groups and the welfare state's role in perpetuating this (Fitzpatrick 2002: 60).

Anti-universalist critiques are also associated with social movements such as the women's movement and the disability" rights movement, which gave birth to many community organisations. These, in turn, became increasingly involved in government-funded service delivery, as government responded to social movement claims. Women's refuges are a good example of this process.

More recently, such critiques have been joined by post-structuralist accounts of social policy, such as the Foucauldian ideas of governmentality developed by Nikolas Rose (1999) and Mitchell Dean (1999). The governmentality approach draws into question not only state-centred programs of redistribution and service provision but any possibility of emancipatory politics beyond the very local and specific. The rejection of grand programs of empowerment and emancipation and the emphasis on the local have given theoretical support to small projects and organisations based in identifiable communities (see Healy et al 2004).

All of these strains of thought can be contrasted with the responses of social de/nocrats who consider anti-universalist theories too indeterminate and unstable to secure a reversal of the individualist excesses of neoliberalism (Dow 1999). In particular, statist social democrats point out the extent to which these theories are compatible with and might even exacerbate growing social inequalities (Dow 1999).

In some cases the pro-state critique is applied directly to the non-government delivery of publicly-funded services. In the Australian context, for example, Geoff Dow has been explicitly critical of non-government organisations for playing 'hands-on' roles in welfare delivery, arguing that only the state is competent to deal with the increasing economiostructural inequalities of Australian society and that service delivery by non-government organisations impedes the development of Australia's under-developed welfare state (Dow 1999). Critics sometimes refer ambiguously to the 'privatisation' of welfare state functions, in a way that risks conflating social-justice-seeking community sector organisations with profit-seeking businesses (for example Healy and Meagher 2004: 246-247).

In attempts to move beyond these conflicts, theorists such as Anthony Giddens (2000) have outlined a 'third way', which aims to replace the statist assumptions of post-war social policy with social capital, networks and collaboration, operating within a broad commitment to social equity. An important concept in third way thinking is that of a 'non-state public sector.' As one of its Australian proponents argues, the idea of a non-state public sector requires 'changing definitions of "public" to emphasise the importance of the open, social and collaborative realm rather than a traditional sense that public is a synonym for state or government' (Stewart-Weeks 1998). This is a definition designed to valorise the role of the community sector by elevating it to the level of 'public.'

Many advocates of the 'non-state public sector' explicitly or implicitly characterise governments as inherently ineffective welfare providers. In response, writers such as McDonald and Marston have begun to question the impact of 'rhetorics of the community sector' in undermining the potential for positive state action (2002b:8). As the following sections show, community organisations struggle to negotiate both the practical and theoretical dilemmas entailed in their ambiguous role.

Community sector struggles for independence and viability

In practical political terms, there are various rationales given for the transfer of welfare functions to the community sector. Community sector workers sometimes bitterly remark that it is not cost-effective for government to provide services itself when it can pay less money to community organisations and still claim the credit. Governments, however, typically highlight community organisations' closeness to their service users, their expertise, their ethical and compassionate motivations and their superior responsiveness to local differences (for example see New South Wales (NSW) Government 2004:7). Underlying these positive statements is an implicit critique of the state: the state is portrayed as lacking those characteristics attributed to community organisations.

From the community sector's point of view, this can be read as a vindication of the legitimacy of grass-roots organisations. Yet the need for government to account for money spent, under the rubric of popular control of government and electoral accountability, means that the state has to underline its legitimacy through the practice of contracting.

It is useful to compare community, sector with private sector contracting. For-profit businesses will not generally accept a too-low price for the goods or services provided. In contrast, community organisations will not necessarily withdraw services if the price is too low. This comparison raises the viability- issues discussed below, and points to the well-recognised devaluation of the caring work done by women (see England 2005). It also indicates that the rationale for the performance of services does not depend on and may not be congruent with the government's rationale for funding these same or similar services. For example, Gabrielle Meagher and Karen Healy have shown that community sector child and family welfare workers see the most important aspect of their role as enabling clients to achieve their goal, but perceive that the funding body's main priority is complying with legal obligations (Meagher and Healy 2003).

Having independent rationales for the delivery of services, community organisations bring some agency and self-determination to the arrangement. Community sector organisations typically have their own membership bases and boards of governance, and are legally accountable as incorporated entities. Funding contracts often include a clause stating that the organisation is not to be considered an agent or in the employment of the government (Administrative Review Council 1998 s4.76). This does not prevent governments from claiming credit for the services provided, including in electoral material (for example Liberal Party of Australia and National Party of Australia 2004:2), and stating that the community sector provides services 'on behalf of government' (Shergold 2005). It is likely that this is how most people would consider the situation. Community organisations must, therefore, contend with the persistent idea of the state as the single legitimate agent of collective responsibility.

The separation between government and the community sector was fundamental to the so-called 'purchaser/provider' split advocated by public choice theorists and enacted in many jurisdictions in the 1980s and 1990s, but it also remains central to the revised 'partnership' models that have predominated since 2000. The language of partnership retains the conceptual separation of government from the community sector. Indeed, some of the reforms to the model that were sought by the community sector and included in subsequent 'partnership' policy, documents are intended to heighten government's awareness of and sensitivity to the independent status of community. organisations. At the same time they require community organisations to respect the need for government to respond to 'broad community priorities' conflicting with the wishes of the sector (Australian Capital Territory (ACT) Government 2004: 7; NSW Government 2004).

From the community sector, opposition to the 'purchaser/provider model' centred on the issues of competition and payment for outputs. Peak bodies pointed out that community services are fundamentally different from other areas of government contracting, and that competitive tendering undermined the collaboration needed to provide services properly (Council on the Ageing (COTA) 1997:3-4). There was concern that competing on the basis of the lowest price would undermine the quality of services, erode the sustainability of the sector and diminish organisations' ability to advocate on behalf of their constituents (Raper 2000:7-8).

With the adoption of 'partnership' models, the threat of universal lowest-price tendering has receded (ACT Council of Social Service (ACTCOSS) 2003a: 10), but contracting is still problematic for community sector organisations. Government typically sets a funding amount and a description of the services, then funds a delivery organisation (selected by tender or another process). This displaces responsibility for service quality to the organisation, without transferring any control over the amount of money available to deliver service quality. In fixed-price funding arrangements, the adjustments that need to be made to inadequate levels of funding occur within organisations, invisibly to the public, except for in crises or scandals. Organisations are in a bind, because to portray their function as a subsidiary arm of government would undermine their independence and bring into question their legitimacy for their constituents and members and perhaps their service users.

The critique of competitive tendering was premised on the inability of organisations to refuse, or refrain from seeking, contracts where the price was too low. Although the language of partnership suggests a relationship of equals, the arguments used to persuade government to increase funding suggest community organisations feel they are weak parties within the relationship. There have been several attempts to put the parties on a more equal footing through the use of agreements and compacts, but the community sector is often critical of government's failure to implement these (NSW Government 2004; Government of South Australia 2005; ACT Government 2004; ACT Department of Disability, Housing and Community Services 2004: 5, 8, 35).

This section has described a struggle, from the part of community organisations, for independence and sustainability. It has also highlighted the fact that independence and sustainability may at times be mutually detrimental. I turn now to the discursive strategies used by community organisations in seeking more money and support from the state while also claiming to be better than the state in doing certain things. In attempting to reconcile inherent contradictions, these strategies presuppose and shape certain visions of social responsibility and the role of the state.

Three Arguments for Government Funding and Support

Although community services are growing as an industry, and community sector organisations are the majority of providers, the demand on their services is greater than their capacity to provide (Australian Bureau of Statistics 2001; Australian Council of Social Service (ACOSS) 2005: 2). Many organisations have long waiting lists or turn people away. The wages that can be offered within available government funding are relatively low, the work demanding, social recognition lacking and career structures underdeveloped. Voluntary boards, often including service users, are under pressure to manage risks, limited finances and compliance with regulations, while maintaining representativeness and member participation. For many community sector workers and board members, however, direct involvement in a self-determining body that has the capacity to improve lives is very satisfying, and often reflects a desire to create something better than the paternalistic and disempowering treatment that they see as characterising the centralised welfare state. All that is missing, from this perspective, is enough money to do more of what they already know how to do, and to make it a sustainable endeavour for all involved. This section of the paper examines three arguments used by community sector organisations to persuade governments to expand (or in some cases simply maintain) their funding and other forms of support.

The most commonly used argument is the ethical responsibility of society to direct funding to services for the disadvantaged through the most appropriate organisations (for example Queensland Council of Social Service (QCOSS) 2006; ACOSS 2004; NSW Children's Services Forum 2002:4). In making this argument, community sector peaks rely on what they hope is a broad consensus about society's responsibility, to care for its most vulnerable members. They are, however, often concerned about potential lack of support from the broader public because of the specialised nature of community organisations, opening them to accusations of self-interest (QCOSS 2005a: 12).

When community organisations seek public resources in order to fulfil part of the state's responsibility for social welfare, these claims have a special status. They imply both the organisation's special knowledge and representation of a disadvantaged group on one hand and, on the other, a role in delivering the government's popular mandate. Advocacy by non-government bodies can be considered an expansion of the concept of representation to ensure adequate voice for groups most affected by government decisions (Sawer and Zappala 2001). But there is a problem with this if the recognition accorded to groups is accompanied by money, which is paid for the performance of tasks for which the government is accountable, or at least takes credit. From the state-centred perspective of representative government, this is an issue of accountability and quality standards, but the struggles outlined in this paper suggest other fundamental problems.

Campaigns against the alleged virtuousness of the not-for-profit sector are increasing. The Business Review Weekly recently explored how 'Australia's $70-billion not-for-profit sector is out of control.' The magazine's Adele Ferguson (2005) argues that 'despite being almost 10% of the economy and employing more than 600,000 people, it is dangerously unaccountable, lacks transparency, and is inefficient. It is the black hole of Australia's economic system, and it is getting bigger every day' (see also Johns 2002).

While such criticism is probably at an extreme, Meagher's (2004) analysis of the Australian Survey of Social Attitudes shows that most people believe government should be responsible for the delivery of social services. So, while community, sector peak bodies are differentiating themselves from the state, the state is still widely perceived as having ultimate responsibility. Importantly, without this perception of responsibility, the state would not be able to raise the revenue on which the community, sector is making a claim.

The dilemma for community sector bodies is that they require a legitimate embodiment of collective responsibility on which to make their ethical claim. While they do not wish to reinforce the statist approach to welfare, they are not in a position to make such a claim for resources through any means other than the state. In addition they, like statist social democrats, are defending the very concept of collective responsibility against the individualist ethos of neoliberalism, with its threat to welfare-oriented taxation.

A second argument used by community organisations to claim resources from the state concerns the desirability of state investment in a growing industry with high social benefits (for example see QCOSS 2005b: 11; Tasmanian Council of Social Service 2005: 55,57; ACTCOSS 2003c.) This argument attempts to counter the neoliberal critique of welfare spending by showing 'why investment in community services, which is a social imperative, is also economically rational' (ACTCOSS 2003c, p. 4). In this view 'the community sector ... is a significant employer ... creating jobs in its own right ... assisting in minimising the disadvantage to the economy from under-utilised labour' (ACTCOSS 2003c: 3). Moreover, 'spending on community services produces beneficial economy-wide effects in value-added and employment' at a higher rate than most other industries (ACTCOSS 2003c: 14).

So far without much success, peak bodies have been using such arguments to link the goal of adequate service funding to government's responsibility for economic management. There is, however, a risk that appealing to an economy-centred account of the state's responsibility undermines claims about its responsibility for social welfare. Community sector peaks argue that, by pointing to the economic benefits of community service spending, they are humanising and expanding the definition of the economic (ACTCOSS 2003c: 34). Yet an expanded definition of the economic, while potentially desirable, does not have enough normative theoretical weight to counter the neoliberal attack on collective responsibility for social welfare.

Furthermore, the economic benefits claimed for community services spending are not exclusive to spending in the non-government sector. That is, they are equally useful to those who wish to make a case for a re-invigorated public sector welfare state (Quiggin 1997). In seeking more funding for the community sector specifically, it is therefore necessary to supplement this argument with the kind of claims mentioned above (the legitimacy of community-based organisations as grass-roots bodies that are closer to service users, more responsive and so on) (for example, Western Australian Network of Alcohol and Other Drug Agencies 2001:1). Community sector peaks also sometimes highlight cost-effectiveness to distinguish their sector from direct government provision, despite the obvious risks of this approach. For example, in a submission on funding for non-government health agencies, the NSW Council of Social Service noted the ability of these agencies to mobilise community resources, the reduced management costs resulting from volunteer management committees, the use of volunteer work generally, and low wages paid to remunerated workers as factors contributing to cost-effectiveness (NSW Council of Social Service 1999:3-4).

In terms of sector viability, these 'benefits' are very problematic. It is likely that government already recognises, and exploits, the cost-effectiveness of community sector service delivery. In practice, organisations usually find that that they can only obtain more money by promising more 'outputs', not as a result of the concerns they express about their viability. Community sector peaks need to carefully consider whether the goal is to have more spending through the sector, or for more money to be committed to achieve given service delivery aims. If it is the latter, this may require peak bodies to focus on valorising the public provision of community services as such (including both government and not-for-profit community sector delivery). In the context of the struggles for legitimacy and independence discussed in this paper, this is likely to be a contentious and difficult task.

One final argument used by community organisations to position themselves in contests about service funding is particularly interesting as it is directed to the public rather than strictly to government, and explicitly addresses the questions of legitimacy and accountability:

   Services developed by the community sector may go on to be funded
   by government but it must be remembered that the community sector
   is independent from government and its accountability is to its
   constituency not to government (other than for specific
   accountability for funds received) (COTA 1995:4).

   Community organisations are not delivering services for government;
   they are providing services for the public with funding support
   from public revenue (ACTCOSS 2003b).

This argument focuses on the legitimacy of community organisations as directly accountable to the public or their 'constituents' (rather than to government) for the delivery of services that return benefits to the community that contributed taxes for them. While writers such as Lee (2004) have discussed how organisations might fulfill an obligation to be accountable to the public, in a way that is analogous to government's accountability to the citizenry, what is of interest here is the use of this obligation as a supporting argument in claims-making.

This kind of argument highlights each party's independent relationship with the public and suggests that both government and community organisations are in some way 'equally' public bodies. This seems to resonate with the vision of a 'non-state public sector' discussed above. Yet, as demonstrated by these examples, this argument is not supported by any non-state model for implementing collective responsibility. In particular, the function of raising public revenue for welfare purposes continues to lie with the state, and it is difficult to imagine a model in which this function could be decentralised, without producing exactly those outcomes sought by neoliberals, against which most community sector actors and pro-state social democrats are, at least for now, uneasily united.

Conclusion

Despite their important role in the disaggregation of the welfare state, the distinctive perspectives of community sector organisations are rarely considered in broader theoretical and political debates. In this paper I have shown how community organisations' claims to public funding and their efforts to maintain independent legitimacy, highlight some problems in the theory and politics of the changing welfare state.

Much recent theorising about welfare has explicitly rejected a state-centred approach. The increasing responsibility of the community sector for service delivery also seems to challenge the centrality of the state. Yet this restructuring is occurring without any practical or theoretical replacement for the state as the legitimate embodiment of collective social responsibility for welfare. Community sector organisations have increasingly acquired responsibility for the delivery of welfare services, without acquiring the state's control over revenue. This puts them in a position where they must continually make claims on the state for resources, while defending their status as independent organisations against the state.

This situation creates considerable risks for the community sector. The most acute of these risks is that the community sector's legitimacy depends on differentiating itself from government, while in practice it relies on government's exclusive capacity to generate public money through taxation. Any non-statist theory of welfare must also grapple with these practical and political problems, which call into question the possibility of a non-state model of collective responsibility for welfare.

The high public support for government delivery of welfare services and the apparent lack of understanding of the complex 'mixed economy' of welfare constitute a recognition problem for the community sector (Meagher 2004; Healy 2004). Both of these factors also suggest that the community sector may benefit from positioning itself as part of a broader public system of welfare, rather than in opposition to government. This would involve valorising a more government-centred concept of 'the public,' with attendant risks to community organisations' independence. The increasing prominence of for-profit providers may make this task both more pressing and more achievable.

Acknowledgements

I am grateful to Professor Marian Sawer and to the anonymous referees for their helpful comments on drafts of this paper.

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