Tony skinner 00:02
Hi, and welcome to the podcast channel for podcastsmy business.com.au and for video for contentmadeeasy.com.au And today we’re welcomingbackback, Danny Davis from lct.org.au. Because we wanted to have a chat about the recent federal budget. And in our last interview, we’re talking about a wellness or well being budget. And I wanted to touch on that and see how it’s been good for the not for profit or for purpose sector. How are you, Danny?
Danny 00:35
Very good. Thank you for having me. 
Tony skinner 00:37
That’s great. Look, thank you for coming back. Yeah, because we were touched on something at the last interview, and I thought, oh, a wellness or Well, being a budget is not really a, I guess, a mainstream way of looking at it. And in fact, the media have not been looking at that at all. So how, explain to us what you mean by a wellness or well being budget?
Danny 00:57
Yeah, well, look, I mean, to be fair to the media, and we wouldn’t want to do that. But I think governments perhaps script on a little bit themselves, they’ve basically put some funding towards developing towards a well being budget rather than making this actually a well being budget in itself. So the earlier announcements that that’s what they were going to do, or perhaps pulled back a little, maybe a little over ambitious. There’s some commentary in the expert. Discussion, gossip groups of possibly a good thing not to rush it.
Danny 01:34
Time will tell and it’s just going to take us a little bit more time to tell look, having said that, you know, the budget is framed. And I’ll differentiate here, it is framed with a number of kind of wellbeing objectives in mind. But that is not sufficient to making it a well being budget. Just being focused on community and well being does not make a well being budget a well being budget is about bringing an agreed set of social measures into the planning framework. So budgets have historically all been about the expenditure. And it’s about the effect of the expenditure on the budget on the future outcomes of the financial measures only a well being budget implies that you’re looking at what is the social and economic social impact of the expenditures that you’re planning?
Danny 02:34
Are you going to make a difference to people’s well being based on all of the items you have and the actions and activities that you’ve committed to in the budget? They haven’t gone there yet. And in fact, what they have promised is pretty light on on, I need to do quite a bit of excavating to find it. What it promised is that they were going to provide an independent paper on some wellbeing measures during 2023. So hey, but yeah, I’ll be I’ll be a little patient with them at this point.
Tony skinner 03:12
Okay, well, I’m going to call a spade a spade. Because during the last interview, we were talking about green washing and whether or not there would be some green washing in the budget. And it seems there’s been a industrial laundromat full of greenwashing.
Danny 03:29
Yeah, look, again, it depends on where you want to come with this. And I’m, I’ve tried to take the step back and get a contextual view of what we’re looking at. And look, you know, this is what I do with organizations is you go in and you kind of read the tea leaves, have a look at the artifacts, they produce a budget, a press release, or whatever, and then go with a thinking and what does that thinking imply about where we’re going and what might be happening?
Danny 04:06
And I you know, the bigger the bigger the organization, the harder that is to do because the less coherent The thinking is. The thinking at the top is not the thinking at the bottom and they all need to come together and that is just massively difficult. I think I will give them some credit it’s out of character but our mind on there isn’t. They haven’t turned the volume up on the washing bed green or otherwise, to an enormously high degree. And I think that actually separates them from the previous government. The previous government had a lot of splashy marketing terms, you know, your three word slogans with very little behind it, sometimes money behind it properly and various sorts or whatever but very little depth, it feels to me like this budget trying to read all of the different tea leaves that are involved in it.
Danny 05:09
First of all, it’s it’s very much an interim most people described it as kind of being almost like a half year budget, and it is only four to five months into into their into their term, which could have either been a we’re going to set a massive ideological shift here. Or we’re going to be full of spin about an ideological shift that we would like to motivate. They actually seem to have resisted. And I feel that there are at least signs of attempts to bring discipline and discipline in terms of the budget mostly hits, what are the areas that are just really broken that we can’t not do something about. And there’s nothing wrong with that, because previously, there have been left broken, people have walked past them.
Danny 06:06
And if it hadn’t seemed, I mirrored this, by the way with what I observe in terms of bureaucratic behavior. In engagements I have across various different people and try and read how that all flows together. I think there was a despondency previously that things just couldn’t be fixed. Broken, things wouldn’t be fixed, the bureaucrats knew they were there were there. They were hurting, because they generally speaking, gross generalization want to fix them. And there was just no capacity to do it. I feel this budget has addressed the biggest areas of internal stupidity and pain, but only in a measured kind of way. And and mostly with an eye. It feels like kind of preparing the ground for them doing something else. And we’re
Tony skinner 06:58
Talking about an area that they want to focus on. And I think they’re finally woken up. And it’s interesting. This side of government that introduced it is the NDIS. Yeah, and that’s something that hits the not for profit slash for purpose sector, slap bang in the middle. Is that I wouldn’t call it a conflict of interest that Is a dichotomy of needs, because you being in that sector. NDIS is great. But maybe you are aware and seen that, you know, there’s some any new government thing, like the pink bats, and everything else is always scammers that rush in Yeah. And trying to make money. Is that where Indios is at the moment.
Danny 07:48
Okay, so I’ll just before I kind of come to that, because it is a very good question. I kind of said that they’ve been trying to fix and maybe get some some foundational ground, but they didn’t miss the opportunity to do some things that are on their ideological front. And they have very specifically talked about doing more in health, more in aged care more in family care more in the NDIS.
Danny 08:16
And, again, they were areas where they had, you know, ideologically, politically and from promises, and we will do something to make this better than they have. With reason, and I think they’ve kind of it feels like they’ve taken the approach of let’s call out what’s broken, let’s actually admit the faults without trying to huge big stink, fix them. NDIS is broken, aged care is broken, for heaven, fix them, they’ve just kind of gone into Patch some of the areas of worse pain. So there is more money, because there hasn’t been enough and people are suffering quite cruelly in places they appear to have put money.
Danny 09:14
One thing I was interested to look at 20-300 extra places in the NDIA. So one of the thing is the organization itself was known for not having been able to make permanent appointments, using contractors who are more expensive and on short term thinking. Not being able to address client needs not being able to change the way that things operate. And I had a little look at that. And I figured that it was something like about 2% of the additional funds they’ve put in, they’ve put two additional staff and I think that’s not unreasonable. Okay. Possibly even a little low. If you think about it.
Danny 09:57
You know what, what percentage of time, effort and money should be spent on making sure the money is working well, two or 300 people is not going to go a long way in that organization, and we don’t know the detail of where they’re going. Clearly they need to do something about some terrible rorting. You read of the criminal gangs out of New South Wales, etc. And, and I’m sure they’re not alone. You know, we don’t know the detail of it. But there are, there are clearly some people who have been taken advantage of in a distinctly criminal way. And I think they’re also across a number of their platforms, they’ve they’ve had people who have been taking advantage in a more systemic and not white collar crime, just just unethical kind of basis. And look, they called out specifically in the aged care space, with a Home Care Packages.
Danny 11:00
An artifact of a system that they put in place a few years ago is people are taking 20 30% of people’s packages in administrative and management costs. And that’s just unconscionable really is, but that’s how the system’s been allowed to operate. It’s not criminal. But it is not right.
Tony skinner 11:23
Yes. Well, I had a client a few years ago that does offer aged care services in the home, they’re a private company. And the difficulty for them is yes, they’re a private company, the for profits. And as we discussed last time, every organization even LCT has to make money one way or another. So how do I make money without crossing the line to the 20, or 30%, which is what they need to make to actually make money.
Danny 11:57
And it’s an it is a difficult thing. But you know, as was pointed out at a sector conference that I was at recently, yes, it’s important that there is a viable sector and a viable industry, and that the organization’s in making profits or if they’re not for profit, they’re making reserves that are sufficient to cope with cash flow and growth and change. But the change is not about us, it actually, we are only here to serve the clients.
Danny 12:30
And to be fair and blunt, we’re really here to serve the sector. So you know, we need to be viable for government, we need to be viable to produce a high value service to clients. And there’s no evidence that that 30 to 40% margin that was being taken or sorry, 20 to 30% margin that’s been taken, was really resulting in better services for clients. So again, I think this comes down to a little bit more sophistication in the programs, people will always try to take advantage of whatever government program is out there, if there’s money on offer, that will range from criminal to unethical to just really do have to do that.
Danny 13:19
Fixing that is, requires government to be a little bit more sophisticated and nuanced in what it does to actually have better management of its expenditure, to not have programs that are so simplistic and so easily routable. It needs them to spend more time actually governing and having some stewardship over what they’re doing and saying, Are we getting good outcomes for our money? It’s a challenge for them because they always kind of fall back on the safe space of, you know, tender probity. You know, we can’t get too involved and sort of like no, you can run tend to probity over here and make investment decisions, but you can still manage the farm and have visibility and our understanding of what you’re doing. It’s this whole outsourcing mentality that people have had pain for for 20 or 30 years now that you can outsource the delivery, but you can’t outsource the ownership, and that they have tried to do that through some of their programs and are reaping the rewards. So look, I’m hoping that the commitment that they’ve made to improve the resourcing of their management results in improved management. But, again, Jury’s out. And I think that’s my wash up of the whole budget really is. Each seems to show an intent for diligent, hard work and addressing the issues. But it’s four or five months in and the issues are ahead of them. So they’ve done the easy ones they’ve done the obvious ones they’ve done and they see seem to have resisted the flashy, big ticket things, but the hard work is ahead.
Tony skinner 15:07
Well, it’s interesting because the Sydney Morning Herald in the age of running a serious for quite a long time about well being, and wanting to have well being as the true measure of GDP, rather than the old, traditional industrial outputs. Now there’s lots of data points on there’s lots of information in that. So out of all of that, what would you like to see in relation for lsvt.org.au. And the second
Danny 15:39
set of that tied in the whole idea of a well being budget is to have these intermingling between the social outcomes, the effect, you know, the goods that you are doing for the people you’re trying to serve, and have measures of whether they are actually having wellbeing in their lives, mixed with these financial measures. There is plenty of research and investigation there. UTS did a lovely report recently on sustainability of aged care, that says, you know, just pouring money more money into it is not going to make a viable sector and is not going to make a better service delivery, we actually need to get real, structural change. And I want to back off and not say structural reform, because structural reform is about regulation. And many of these things are not solvable. By regulation. It’s like saying, you know, what we need and what link is trying to push is, is disruption. If you were looking at creating a, you know, let’s use ones we know better, a better banking interface through through through your mobile phone, and you think you can actually get some real systemic disruption in the way that a sector works. And who knows, when was the last time you were physically in a bank, trying to withdraw cash and, you know, it’s just something we don’t need to do anymore. And thank God for that it’s better economically, it’s more more, you know, lower cost of doing businesses just an easy way to live. It needed disruption, it didn’t need to yet there was change in regulation, but that’s a follower to enable. And to smooth the course, there’s too much of a temptation, amongst a lot of the thinking is the commentators that it is about regulatory change and structural reform, it’s about regulation, it needs to be about better services, it needs to be about shaking up the way that services are delivered. So we’re we’re delivering services that are not massively dissimilar to some of the services that people are putting 20 to 30% margin on at zero March. Now, we’re not doing all of them, etc. And some of the reason for that is because we’ve got regulatory hurdles that are preventing us from doing more. So we’re reaching out to government to try to release some of those barriers and actually work on the design of their new program to break down some of those barriers that artificially stop service provision in other areas, etc, to allow new models to occur to allow digitally enhanced models to occur to disrupt the sector of care to make it easier to get access to services, easy for people to make use of what is available, take some of the cost of delivery out of the sector, it’s not that different from from things that have happened in banking or transport or elsewhere happened happened in the in the services in the in the age and the disability in those sectors. And there’s obviously always can be a huge face to face component of care. But there’s a lot of treacle and mud that people need to drag themselves to to get a tiny piece of care at the other end of that. That’s where you’re going to get the major change, not in the amount that spent the effect that you have. And again, I’m to say we’re not going to get there without having the management capacity and the will in the organizations that deliver it to participate in change. Can’t happen without the can’t disrupt government out of the sector, or half the parties participate. No choice. Yeah, 
Tony skinner 19:17
so is there. Okay, so he comes to the curly question. He thought the other ones were curly, this is the curly question. So is there a large element of what I call the cya syndrome? The cover your arse sydndrome in the sector?
Danny 19:36
Look, yes, I think that’s how the sector sits and why it’s ripe for disruption. You know, that there’s there’s a lot of people who just spend a lot of their time covering their arse within their own swim lane. And they’re looking after their organization trying to protect it from from threatened damage to those look, those threats from the the potential liabilities in the sector are very real. But if you come back to and this is what Link has been able to do, and I’m a big believer in these things are our governance led, really, at the board level at the leadership level coming back and saying,
Danny 20:13
What is our purpose? Why are we here? How are we here to do the same job we did yesterday? And and be better at doing it internally? Or are we here to make a difference to the consumer? And what’s the biggest thing that our effort can do to make a difference to those people? Is it? Is it trying harder in the face to face every day? And even better customers service. But at the end of the day, if that’s only 5%, of what you do, and it should be 70%, of what you do, that’s where you can make the difference it should be better. But you make systemic change by changing the the balance of how these things operate, how the sector flows, how it all fits together. And for us, that’s a lot of reaching out across different areas of government. And I think that’s the real challenge here.
Danny 21:04
And the cover your ass thing, I think I’m going to point yes, it’s within the sector. But it’s within government. And this just enough that the sector in other sectors have gone through disruption. And these sectors haven’t. And one of the reasons, not the only reason, one of the reasons is that government has to be party to it, it cannot happen to them, it has to happen with them. And they need to have the attitude and the mindset, and the leadership, which seems to be there it’s in it’s not loud, in the materials that I’m seeing, but it is I’m seeing some signs, it is going to need a little bit more loud leadership, so long as they don’t go all the way to spin.
Danny 21:51
And it’s gonna need preparedness for them to be willing to get past the cya. And into, okay, how can we actually make a difference? What would need to happen? How can we actually digest that and look, are going to do full circle here, that’s, that’s where a well being budget comes into it, we can make a difference. Here are the specific things that we’re going to need to do to make that difference. If we do not do these things, the needle is not going to move on the outcome. Because otherwise you fall back to well, we’re going to do these things. We’re spending some money, aren’t we good?
Tony skinner 22:33
Yeah, we’re just throwing money at the wall. And hoping for it to stick
Danny 22:36
people accountable for risk. Cover your ass, do the same thing you did yesterday, it’s safe, don’t make change, you’ll be blamed. Whereas if he gets the, the whole point of this whole exercise, is to get measures in place that say, That’s the measure of the day, your job is to take the measure to here, if you don’t do that you will be blamed, find things that are going to make a difference. So
Tony skinner 22:59
Well, it seems like this is across the board, not just in one sector. But it seems to be a lot of fulfilling the definition of insanity. Yeah, absolutely. Doing the same thing and hoping each day and hoping for a different outcome.
Danny 23:15
And again, I’m coming down to my bias, which is governance lead, which is saying, governance has to have the ambition and re investigate why we’re here in what we want to serve, but then needs to actually they are responsible for saying, How are we going to measure it? All we’re going to measure is the expenditure.
Danny 23:35
All you’re getting it is the insanity of trying the same thing again, because the person’s going to cover their arse and take no risk, if the measure is on the outcome. And you were actually saying you’re doing the forward looking governance, which is my whole kit of enhanced governance practices for future value creation, saying, What is the impact going to be from the activities you have currently committed to what’s in your portfolio? What’s everything? If you’re in a company, you know, got a project program portfolio, that’s nice. You can measure if you’re in government, you’ve actually got to measure across the sector in stewardship.
Danny 24:10
It’s not just the stuff you do. It’s the stuff link is doing fun stuff, that organization stuff all the different state, federal local nonprofits doing save all of those things happened, is it gonna move the needle, or all those things just more of the same? That’s the art form. That’s what we hope for and have a really ambitious transformation in the way that things are governed and therefore the thinking ultimately here, you want to put measures and behaviors in place place that change decision making on a day to day basis. It’s not the big decisions you see on the budget. This is why I come back to see what’s the character behind it. It’s not the big decisions of the budget. That’s just the big threshold stuff. It’s the day to day behaviors. Stop the cover your arse start opening up and inviting I need to find something here that’s going to make a difference. Do you know something about that guy over there? No, I’m not doing that. But that one sounds good. That’s the behavior that day to day decision making you want to influence and making that look at outcomes, not just financial is where you want to hit.
Tony skinner 25:18
Well, just to finish up, I’ve got friends who do work in the for purpose sector. It seems one of their biggest frustrations is the people at the top. Don’t seem interested in what the people at the coalface have to say, what they’re dealing with what they’re coping with. So let’s hope that’s what changes more and that’s what I expect a wellness budget and the well being budget also focuses on as all those personal points rather than money points. So thank you very much for that, Danny, most appreciated and that’s Danny Davis from lct.org.au. And than
