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It's time we moved pro-actively on expanding the Social Sector

By Syd Hickman - posted Thursday, 9 October 2003

The Liberal Party likes to be seen praising the social sector. Prime Minister Howard set up a committee to look at ways to increase philanthropy and Peter Costello recently gave a vague talk on social capital and the virtues of making a social contribution.

But for all the talk there has been little government action other than some new tax breaks for giving and attempts to cut costs by sub-contracting work to the social sector. We now have the Job Network instead of social sector jobs. There has even been an attempt to cut back on the social sector through a proposal to abolish tax-free status for charities involved in advocacy.

Liberal Party rhetoric again covers for conservative policy, and the chance to make a huge improvement in Australian life is being missed.


The benefits of social capital are becoming increasingly well known. Francis Fukuyama, Peter Drucker and other leading thinkers have brought together a wide range of research to show that high levels of social interaction reduce the levels of crime, health problems and social dysfunction in society. In our reasonably efficient and wealthy society, strong social networks can help us to reconnect in new ways. In short, a society with strong social networks is cheaper to run and produces happier people. It rebuilds lost trust and the preparedness to do things for others.

Creating high levels of social capital means having a strong social sector but the full potential of this has barely been considered, let alone developed.

It is time to commit to a new era of planned, rapid expansion.

Existing social sector

According to the ABS, non-profit institutions contributed $21 billion, or 3.3 per cent of GDP, to the Australian economy in 1999-2000. This study put the economic value of volunteers at $8.9 billion, which pushed the value of the non-profit sector up to $30 billion, or 4.7 per cent of GDP. The survey also showed that non-profit institutions employed 604 000 people, or 6.8 per cent of the workforce.

Philanthropy Australia also provides evidence of the size of the social sector through its estimates of individual giving. They estimate that Australia has at least 2000 trusts and foundations with combined assets of around $10 billion and distributing up to one billion dollars per annum.


The key to the expansion of the social sector is partnership. Business, government and social organisations will need to work with each other to create opportunities and to ensure the best results for all participants.


Existing direct government funding will need to be increased and could be provided to social-sector organisations to employ people for socially useful tasks. The jobs created would be more beneficial to all parties than the existing coercive work-for-the-dole scheme.

State and commonwealth governments should have ministers for the Social Sector, supported by high-quality departments. They could fund experiments with social-sector agencies to find new ways of helping people with long-term dependence on public assistance. The point is not to dictate solutions but to set standards within which the best solutions for particular circumstance can be found.

Government should not be the only source of finance. The work done by Prime Minister's philanthropy committee should be drawn on to establish a more generous tax deduction scheme than currently exists. Apart from simple deductions, which are of particular appeal to those in the top tax bracket, there should be schemes to increase giving by the general community, such as allowing a proportion of a tax payment to be directed to the charity of a person's choice.

Business should be encouraged to play a greater role through the further expansion of Corporate Social Responsibility (CSR) programs. This could be done cheaply with public advocacy, such as recognition and awards programs, or with more generous tax treatment of social contributions.

As with any rapid expansion, people will need to be trained to cope with the new demands. Some of this could be satisfied with simple courses, but there will also need to be serious academic research and a vast improvement in data gathering to guide the sector's expansion.

Cost savings and benefits

The long-term benefits flowing from a substantial government investment in the social sector would be enormous. Employment levels would increase and there would be a steady expansion of social capital. This would then generate cost savings to government in other areas. Add these to the benefits generated by expanded CSR programs and philanthropy, and the cost of an initial full-blooded commitment of a few billion dollars of taxpayers funds would be significantly reduced.

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About the Author

Syd Hickman has worked as a school teacher, soldier, Commonwealth and State public servant, on the staff of a Premier, as chief of Staff to a Federal Minister and leader of the Opposition, and has survived for more than a decade in the small business world.

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