The first pillar, the community welfare sector, was assigned a key role in Australian social policy until World War II. A ‘welfare society’ sustained by wage-earners’ welfare was preferred to the welfare state. This model placed great value on what today we would call the voluntary principle, with individuals and community groups trusted to manage their own affairs rather than be managed by government. The ‘Australian way’ has clearly privileged the contribution of voluntary organisations and is likely to continue to do so.

The second pillar was founded on the hard-won wisdom of the Great Depression—that often what voluntary groups could do by the ‘tens’ needed to be done by the ‘hundreds’ by governments. To guarantee the ‘fair go’ of Australian social policy, voluntary effort had to be underpinned by government guarantees to all citizens.

These two pillars were synthesised in the 1970s and 1980s in the Keynesian-style welfare state. The government oversaw the macro-social development of its citizens and the community sector provided a complementary role: filling gaps, innovating, being an ombudsman and bringing effective local knowledge into policy development. An older sectarian competitiveness in the sector gave way to collaboration between agencies and with government (Smyth and Wearing 2002). Many of the community-development practices generated in this period still have relevance today. The central aim of including all citizens more directly in the decisions that affected their lives was nicely described in terms of welfare by R. G. Brown’s (1975) phrase of developing a ‘constituency of the poor’. What was missing in this model was any connection between social and economic development.

The role of the sector changed radically with the switch to free-market economics in the 1990s. The broad aim of social development based on citizenship entitlement was replaced by ‘conditional welfare for the few’. In a climate of fiscal austerity, governments turned to contracting out public services via the mechanism of quasi-markets with the aim of achieving greater ‘value for money’. Collaboration in the sector was replaced by competition and, for many welfare agencies, growing ‘market share’ became the central organisational driver. Peak bodies were destabilised and the old ombudsman or advocacy role was compromised. In the literature, this became known as the era of the ‘industry model’ and it is this model that is slowly being abandoned as governments and the community sector reach for more joined up collaborative models.

The failings of the industry model—epitomised in the Job Network—have been canvassed in the literature (McDonald and Marston 2005; Mwaiteleke 2007). It is said to be unsuited to the people and places with multiple disadvantage, which are increasingly becoming the core clientele of the Job Network. It is said to be overly centralised with excessive regulation, which hinders responsive professional practice. It is also said to overlook unique local circumstances and directs activity away from collaboration, advocacy, lobbying and networking.

The central failing was the problem identified in the literature as isomorphism—that is, the dynamics of competitive contracting tended to turn the sector into an image of government departments. The sector’s ‘first-pillar’ role with its ‘voluntary’ character and community-based features was compromised as agencies took on the characteristics of semi-state agencies. The community sector found itself constrained by excessive centralisation and regulation and less and less able to respond to human and local complexity. Its ability to exercise local discretion became shackled and capacities for collaboration, advocacy and lobbying seriously impaired.

It is notable that the arguments for an ‘industry’ model for the community sector are primarily economic and this highlights the importance of the ‘third pillar’ in social governance—namely, the role of the market. In the welfare-state model, the community sector’s role was constructed as social—that is, based on advancing social or human rights. This function was thought to have nothing to do with the economy or indeed was seen as being inherently against the capitalist economy. In the industry-model phase, the goal of economic efficiency often appeared to be opposed to the social-development goals of earlier times.

Today, we see a reconfiguring of this third pillar—the market economy—and in ways that indicate a new convergence of economic and social goals. This is witnessed in part by the continuing expansion of the social responsibility of corporations, but also by the recognition by governments that the primary aim of economic policy today is to create a ‘third wave’ of productivity growth that will simply not happen without the effective engagement of certain people and places currently excluded from mainstream economic and social participation (Productivity Commission 2007).

For the three sectors to enter a new era of collaborative governance, due attention needs to be paid to this emerging policy framework. It is no longer useful to think of social policies in terms of ‘ending welfare dependency’ or ‘ending welfare as we know it’ with the sub-goal of ensuring conditional welfare only for the few. Not only will there be a participation and productivity penalty for allowing continuing social exclusion, there will be a growing economic cost in terms of services needed to address the fallout of social neglect.