He told an audience at Trinity College Dublin's Centre for Nonprofit Management that UK politicians are wrong to think involving charities in public service delivery will automatically guarantee innovation and "the reform of public services that everyone wants to see." He said such a belief was "simplistic".
He said: "Public services aren't inefficient or ineffective just because they are in the public sector. Indeed, many public sector services are very good. And those that aren't won't be any more efficient if they are just transferred out as they are now."
The voluntary sector did not have a monopoly on innovation, he said, and the extra innovative potential offered by charities' independence and user-involvement would only lead to better services "in the right circumstances".
"The needs of users must be placed at the heart of service design as well as service delivery," he said. "Commissioners need to be working with voluntary organisations in identifying needs and designing services, not simply using the sector as an alternative provider of services."
Etherington also suggested that sector organisations competing with private firms to win public service contracts should consider fighting for their intellectual property rights.
"Under charity law, we are required to maximise our assets," he said. "Surely our ideas should be treated as assets. They are a central part of why Government is so keen to work with us. Why are we giving them away for free?"