Senate Estimates Committees – Investment approach to welfare – October 2016

Filed under: Politics, Australian Politics, Senate, Social and Community, Age Pension,

Senate Estimates Committees are an important but little-understood parliamentary process which allows senators from all sides to question officials and (Senate-based) ministers in detail about matters in their portfolio.

While high-profile political clashes (mostly between the political rivals) attract the lion’s share of media attention from Estimates Committee hearings, the Committee process also unearths a wealth of less newsworthy but detailed policy and implementation information not available elsewhere, of importance to those with a stake in policy areas.

(The expansion of the Senate committee process in the 1960s and 1970s under the leadership of Labor’s Senate leader Lionel Murphy had the effect of turning the Senate from a sleepy backwater into a serious house of review.)

In contrast to parliamentary question time, the interrogation process is more like court-room questioning with senators able to explore issues in some detail when those under questioning are reluctant to provide detailed answers which could be politically uncomfortable.

Estimates hearings are held twice a year for each portfolio, after the Budget in May and additional estimates towards the end of the year.

Investment approach to welfare

  • Officials outlined the difference in the ‘investment approach’ in Australia compared to the established New Zealand process. Australia’s evaluation includes the aged pension because it is a means-tested age pension. New Zealand's model only includes working age payments. It does not include NZ’s national superannuation scheme (NZ Super) because it is a universal access scheme. So anything that happened in the working years does not impact on what a person receives on retirement or the outlays associated with that. The New Zealand model has had a number of years to mature and we are at the start of a journey.
  • KPIs for the NZ model included reducing welfare costs. Also impacts on health and justice outcomes. The goals that have been identified for the Australian model are about increasing the capacity to live independently of welfare, essentially through employment, obviously; reducing the risk of intergenerational welfare receipt; and reducing long-term social security outlays. Of course, they connect to lifetime well-being, which is the mission of the department. Our model examines both working-age and retirement-age payments and picks up non-income support payments like family tax benefit and child care. Their model focuses on working-age income support payments only. We have an annual model. New Zealand has used a quarterly model, run yearly. The reason for that is to reduce the volatility and movements.
  • We are at the start of our process. We clearly do have a different configuration in terms of the Commonwealth government compared to the New Zealand setting. We are looking at those things that are, in the first instance, within the Commonwealth's management, but see the scope over time and have started conversations about working with colleagues in the states and territories to collaborate in ways that can harness and share groups of interest over time.
  • The Minister for Social Services Christian Porter announced in his Press Club speech the intention to make the underpinning administrative data available. It will be available about February or March next year.
  • The notion of using actuarial analysis and developing models that help you look at points of intervention targeted on risk to improve outcomes and avoid or reduce future costs is clearly the underpinning of the whole National Disability Insurance Scheme. This is an approach that is getting more currency across social policy. It has been used in insurance but it is becoming a point of greater interest for those who work in social policy.
  • Officials compared the investment approach to ‘social investment bonds’. which are a sort of financing mechanism whereby a very clear outcome is identified and there is essentially investors’ money at risk contingent on the outcome being delivered. They are being pursued in small ways in Australia currently with a few states and territories getting into them. They are an alternative approach which the department is watching with great interest.
  • The $78 million ‘Try, Test and Learn Fund’ will fund external programs not internal government programs but the Government may seek to use the data to evaluate the effectiveness of some of its existing funded activity. “We are not ruling out ideas coming from within the bureaucracy, but we had not anticipated funding ourselves through the competitive investment fund, if that makes sense. The learnings from this process might, of course, be used for us to inform government about policy change, changes to the nature of our grant programs or potentially even things which might occur in Human Services or jobactive and that sort of thing. We would hope that they would actually start in the next financial year.“
  • Officials acknowledged that the public discussion about the escalating cost of carers payments did not take account of the cost savings from carers’ activities. “It is a fact that carers payment is the fastest-growing of the payments, but that does not in any way suggest that the work that carers do is not incredibly valued,” one official said. “I guess that is the reason that doing the future lifetime costs and future outcomes is so important. What it shows us is that, when caring has finished, young carers and working age carers, but particularly those people who take up caring at very young ages, have poor lifetime outcomes. Because they have compromised their schooling et cetera, they do not transition back out of the system.”

Further Reading