1 The National Compact: civilising the relationship between government and the not-for-profit sector in Australia John Butcher Labor in Power 2007-2013 We might have expected in 2007 that a reformist Labor government would seek to make its mark in social policy. After all, Labor had positioned itself as the party of fairness and inclusiveness – the antidote to the neoliberal excesses of the Howard government. However, as we now know, Labor’s capacity to invest in social programs was severely constrained, first by its response to the 2009 global financial crisis and, later by its fruitless pursuit of a budget surplus. We also know that Labor was hindered by internal divisions and, under Gillard’s leadership, minority government made the task of governing all the harder. Howard & Marketisation When elected in 1996 it quickly became clear that the Howard government was committed to the utilisation of market mechanisms to deliver services to, and on behalf of government. In this Howard built on the microeconomic reforms of the Hawke & Keating governments aimed at improving public sector efficiency and creating competition in utility markets. Howard took market-based reforms to another level with the creation in 1998 of the Job Network which offered over $640 million in contracts to a network of around 300 private, community and government provider organisations (ANAO, 2000). The Job Network established the precedent for competitive tendering and contracting with not-for-profit sector, and the principle of performance-based third-party contracting was later extended to other social programs.