The care economy involves services such as health, aged persons, child and disability care. It is a significant part of ‘human services’, a broad range of social support services and programs that aim to improve the well-being of individuals, families and communities. However, neither ‘care economy services’ nor ‘human services’ is well-defined. This paper focuses on human services more broadly. Human services make up most of the non-market sector in Australia. This paper poses that improving productivity, service standards and innovation in the care economy is a key part of improving Australians’ living standards. 

Human services markets will only be successful if government recognises and actively engages in its roles, particularly its role as market designer and market steward. This paper finds that while market design is critical to the delivery of effective and efficient human services, it is often done poorly, on an ad hoc basis.

Key findings

• At the micro-level, while some human services markets have been planned most have evolved over time with little if any deliberate design to ensure that appropriate services are received by consumers at minimum cost to taxpayers.
• Even where markets have been planned, the outcomes have often differed from expectations due to poor incentives and poor outcomes created by the market design.
• At the macro-level, measured productivity gains in the provision of human services are low to non-existent.
• Labour productivity in the non-market sector has been negative over the past decade, largely accounting for the Australia’s zero measured labour productivity growth since 2016. This suggests that the lack of productivity growth in human services has been a drag on growth across the economy.