Welfare groups say a call for more competition in the social services area should be treated with caution while Consumer group Choice says the "ambitious" report has the potential to potential to reshape the competitive landscape of Australia.
A landmark review of competition policy by Professor Ian Harper has called for the states to set up trial projects in sectors ranging from child care and health to prisons and schools.
The trials would test innovative ways of delivering services using principles such as user-choice, diversity of providers and minimum standards of quality and access.
"For-profit providers ... are likely to face stronger incentives to minimise cost, including through adopting new technologies and innovative methods of service delivery," the report said.
The Australian Competition and Consumer Commission said competition in the human services sector could deliver lower prices and greater efficiencies - important factors as government budgets get tighter.
Already, 70 per cent of long-day care for children is provided by the for-profit sector, and private hospitals service about 40 per cent of all inpatients.
The private for-profit sector also provides more than a third of all residential aged care.
In a statement responding to the report, CHOICE CEO Alan Kirkland said the report had "the potential to reshape the competitive landscape for the coming decades."
"Our message to the Federal Government is to stay focused on the end-game for competition policy, which is making life better for Australians," he said in the statement.
"These reforms are about delivering Australian consumers better prices and services, especially where some domestic industries have long been shielded from competition."
The Australian Industry Group (Ai Group) said in a statement that it supported the review’s recommendation that trading restrictions in enterprise agreements be outlawed.
Ai Group Chief Executive Innes Willox said in a statement: "These types of clauses are frequently pursued by unions during enterprise agreement negotiations. They stifle competition and impose major inefficiencies on employers. It is in the community’s interest that they be stamped out, as recommended by the Review Panel."
The Harper report gave the example of a Queensland voucher system for dental care, redeemable at private clinics, which had eliminated long waiting times.
Australian Council of Social Service CEO Dr Cassandra Goldie said consumer choice and private sector involvement was important.
"But to date, the community sector's experiences of privatisation in health, childcare and employment services point to price inflation, higher costs to government, less collaboration and questionable outcomes for the community," Dr Goldie said.
She said a national approach was not always the best way to deal with services.
"Communities identify and meet their own needs in various ways, and funding options, including from governments, need to reflect this," she said.
ACOSS supported the principle that individuals, particularly those who are disadvantaged, should be empowered to make choices about which services best meet their needs.
"But we should not assume that greater market competition will produce better options for people."
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