Friday, September 27, 2013

I'll vouch for vouchers to keep aid on track

Current legal aid funding arrangements are responsible for an industry that fails to provide quality legal services to clients.

Instead, taxpayer funds that should be spent on service provision are used to lobby government on issues that help feather the nests of those working in the legal aid industry.

Voucherised legal aid is one reform that could resolve these issues and bring competition to the legal aid sector.

Last week the Productivity Commission released an issues paper on access to justice.  Among the issues raised was funding models.  Specifically, the use of vouchers has been highlighted as an alternative way of funding legal aid services.

The proposal is certainly worthy of consideration.  Legal aid vouchers would solve a host of problems associated with the current flawed funding model.

Most obviously, vouchers would bring much-needed competition to the legal aid sector.  Currently, large pools of funds are created by the commonwealth and state governments in accordance with the national partnership agreement on legal assistance services and various other exclusive funding agreements and grants at each level of government.  These funds are doled out to a number of bodies that either provide services directly or fund other service provision agencies.

Many in the legal aid industry believe the goal of increasing quality can only be achieved with dramatic funding increases.  They're wrong.  It's not more government funding that will increase access to legal services — it's competition.

Competition puts pressure on service providers to think creatively about ways they can save money for their clients.

Encouraging the provision of more efficient legal services will decrease legal costs and increase access to the courts.  In 1936, the English economist William Harold Hutt coined the term ''consumer sovereignty'' in his famous book Economists and the Public.  This is the idea that goods and services in a market economy will only be produced where they satisfy consumer preferences.  This concept forms the basis for voucherised funding models in other areas, such as education.

Consumer sovereignty should also be given effect in the provision of legal aid.  The current funding model is not based on the preferences of those who actually use legal services, but on bureaucratic whim.  Rather than asking public servants to guess what consumers want, a voucherised funding model allows individuals to purchase legal services in accordance with their own preferences.  The current funding model is responsible for the creation of a cartel.  By funding particular legal service providers over others, current arrangements entrench a cartel backed by the state.

Choice for consumers would go some way to breaking the legal aid cartel, creating a more diverse industry consisting of hundreds of law firms and sole practitioners, all duking it in a battle for business.

This isn't just a matter of impoverished clients getting value for money.  It's also about state and commonwealth governments avoiding budgets in the red.

Over the last five years, funding to Victoria Legal Aid has increased annually at a rate of just under 7 per cent.  The average annual rate of inflation over the same period was 2.7 per cent.  That translates to a real spending increase of over 4 per cent a year.

And this isn't the only way that governments fund legal aid.  Both state and commonwealth governments also provide smaller grants to fund specific programs.

And there's a further benefit from voucherised legal aid.  Such a system would dramatically reduce the undemocratic efforts of particular organisations in the legal aid industry that use taxpayer money to lobby for policy change.

Here's a simple idea:  legal aid bodies should be providing legal aid services.  In reality, the provision of legal services is just one aspect of the work undertaken by organisations that get legal aid funding from the government.

Such work is usually described as ''advocacy'' work.  But that expression has been used to justify legal aid industry lobbying of government.  It's an appalling example of the government petitioning itself — government provides money to legal aid bodies that use those funds to lobby government.

Earlier this year, a number of community legal centres took it upon themselves to stridently argue in favour of former attorney-general Nicola Roxon's illiberal anti-discrimination laws.

It's not up to community legal centres and legal aid providers to drive a left wing agenda using taxpayer funds.  If lawyers at community legal centres want to lobby government over their pet issues they're free to set up private organisations that raise money through voluntary donations.

Under a legal aid funding model based on vouchers, consumers of legal aid would be completely free to choose their own legal services so long as those services met certain criteria.  Placing restrictions on the use of vouchers so they can only be used for legal assistance would be a big step in the right direction.

A voucher-based legal aid funding model would inject competition into the sector and improve the way that legal assistance is provided, while also making it less of a vehicle for leftist lawyers to lobby government.  The Productivity Commission should recommend such a model.

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