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Outsourcing of Public Services in Australia - Seven Case Studies


  • Peter Abelson

    () (Department of Economics, Macquarie University)


The paper starts with a brief introduction to the main principles of outsourcing and a description of the recent history of outsourcing in the two largest states, New South Wales and Victoria. The main part of the paper then describes seven case studies which exemplify the process and possible outcomes of outsourcing. The case studies are not randomly selected. Indeed reported results of outsourcing are likely to be biased towards success stories because governments usually suppress poor results. Consistent with other studies, in five of the reported case studies, outsourcing cut costs or raised the quality of services, or both. These examples indicate that there are significant potential gains from outsourcing. However, the potential gains are not always achieved. To achieve these gains, contracting out often requires significant structural reform of an organization and always requires detailed planning and ongoing agency commitment. As the other two case studies show, with poor management contracting-out can produce expensive outcomes or major service failures.

Suggested Citation

  • Peter Abelson, 2005. "Outsourcing of Public Services in Australia - Seven Case Studies," Research Papers 0503, Macquarie University, Department of Economics.
  • Handle: RePEc:mac:wpaper:0503

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    References listed on IDEAS

    1. Bruce Chapman, 2001. "Australian Higher Education Financing: Issues for Reform," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(2), pages 195-204.
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    3. Avkiran, Necmi K., 2001. "Investigating technical and scale efficiencies of Australian Universities through data envelopment analysis," Socio-Economic Planning Sciences, Elsevier, vol. 35(1), pages 57-80, March.
    4. Throsby, C D, 1986. "Cost Functions for Australian Universities," Australian Economic Papers, Wiley Blackwell, vol. 25(47), pages 175-192, December.
    5. Simon Marginson, 2001. "Trends in the Funding of Australian Higher Education," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(2), pages 205-215.
    6. Peter Abelson, 2005. "Surveying University Student Standards In Economics," Economic Papers, The Economic Society of Australia, vol. 24(2), pages 116-132, June.
    7. Hay, Donald A & Liu, Guy S, 1997. "The Efficiency of Firms: What Difference Does Competition Make?," Economic Journal, Royal Economic Society, vol. 107(442), pages 597-617, May.
    8. Stephen P. King, 2001. "The Funding of Higher Education in Australia: Overview and Alternatives," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(2), pages 190-194.
    9. Abbott, M. & Doucouliagos, C., 2003. "The efficiency of Australian universities: a data envelopment analysis," Economics of Education Review, Elsevier, vol. 22(1), pages 89-97, February.
    10. Melville L. McMillan & Debasish Datta, 1998. "The Relative Efficiencies of Canadian Universities: A DEA Perspective," Canadian Public Policy, University of Toronto Press, vol. 24(4), pages 485-511, December.
    11. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990. "Production frontiers with cross-sectional and time-series variation in efficiency levels," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 185-200.
    12. Roger Carrington & Tim Coelli & D. S. Prasada Rao, 2005. "The Performance Of Australian Universities: Conceptual Issues And Preliminary Results," Economic Papers, The Economic Society of Australia, vol. 24(2), pages 145-163, June.
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    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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