Contents
- Part 1 Executive Summary
- Part 2 Performance reporting
- Part 3 Corporate governance and accountability
- Part 4 Appendices
- Part 5 Financial Management
Annual Report 2008–2009
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Annual Report 2008–2009
Annual Report 2008–2009 » Chapter 3: Our operating environment
FaHCSIA operates in a complex environment affected by a range of factors, including changing social and economic trends, family formation and stability, and population growth. The interactions of these factors, particularly in the current global financial climate, have created challenging circumstances for many individuals, families and communities.
Policy development and reform continues to be set against a backdrop of projected changes in Australia's demographic structure. The recognition that Australia, along with most of the developed world, is facing an ageing population greatly influences the strategic context of current and future policy direction.
This demographic change will have significant implications for income support, health and aged care services and general economic growth. The need to ensure that adequacy is balanced with long-term sustainability in payments to individuals will continue to strongly influence FaHCSIA's business.
A major change in our operating environment occurred in January this year when the Council of Australian Governments (COAG) reform agenda was implemented. Under this reform, funding previously paid to states and territories by FaHCSIA is now appropriated to the Treasury. A new financial framework has resulted in a significant rationalisation of Specific Purpose Payments for the delivery of core government services.
Under the new arrangements, FaHCSIA now has policy responsibility for three national agreements and six national partnership agreements, which involve significant reforms in the areas of housing, disabilities, and closing the gap on Indigenous disadvantage.
This year saw a significant shift in economic conditions, which had a broad impact across the Australian economy. Projected increases in unemployment, reductions in Commonwealth revenue, and the impact on individual wellbeing will require continued monitoring to ensure that policy responses remain sustainable while providing the necessary support to individuals and families.
The Department has actively responded to the impact of the global financial crisis by providing financial support and helping to build resilience and capacity in individuals, families and communities affected by the economic downturn.
In October 2008, the Government announced the Economic Security Strategy to offer immediate support for many Australians in response to the crisis. In December 2008, the Department paid seniors, people with disability and carers a lump-sum Economic Security Strategy payment of $1,400 for singles and $1,050 for each eligible member of a couple. Families received $1,000 for each eligible dependent child.
In February 2009, the Government announced a second package in response to the global recession—the $42 billion Nation Building—Economic Stimulus Plan. The Department played a key role through the delivery of a range of one-off payments through Centrelink, supporting eligible low- and middle-income households with school age children, single income families, single workers and students.
To complement the economic stimulus payments, the Government announced $80.4 million extra funding for emergency relief and financial counselling, doubling funding from 1 March 2009 to 30 June 2011.
The Social Housing Initiative will significantly increase the supply of social housing throughout Australia and provide much-needed accommodation to many disadvantaged Australians, particularly those who are homeless or at risk of becoming homeless. As a requirement for receiving funding through the initiative, states and territories have also agreed to a number of reform directions in the social housing sector, which will provide increased opportunities for persons who are homeless or at risk of homelessness to gain secure long-term accommodation.
Maintaining a strong evidence base on the impact of economic conditions on Australian individuals, families and communities will assist FaHCSIA in responding to changing needs and in continuing to further the social inclusion agenda.
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Indigenous people remain among the most disadvantaged Australians. While some important steps have been taken to address Indigenous disadvantage, the Productivity Commission's 2009 report, Overcoming Indigenous Disadvantage, found that there are still significant gaps in the key areas of life expectancy, infant and child mortality, early childhood education, literacy and numeracy skills, school completion rates, and employment outcomes. For example, the gap between Indigenous and non-Indigenous life expectancy at birth was 11.5 years for males and 9.7 years for females, Indigenous child mortality rates for the 1–4 years and 0–4 years age groups are at between two and four times the non-Indigenous rates, and the gap between Indigenous students' learning outcomes and those of all students increased as remoteness increased. Closing the gap between Indigenous and non-Indigenous Australians will require a strong collaborative commitment from governments, Indigenous Australians, business and the wider community.
It is encouraging to note areas where the gaps are narrowing. For example, there has been a reduction in infant mortality and in the proportion of young Indigenous people neither at school nor employed. There have also been improvements in access to clean water and functional sewerage and electricity services in some Indigenous communities.
Disadvantage is not limited to Indigenous Australians living in remote areas. Since 1971 the proportion of the Indigenous population living in places with 1,000 or more people has grown from 44 per cent to 76 per cent in 2006. In 2006 three quarters of all Indigenous Australians lived either in Australia's major cities or regional areas. Of these, it is estimated that 45 per cent of Indigenous people aged 18 years and younger live in the suburbs and towns in the lower 20 per cent of Census collection districts.2 Within the same suburb or large regional town, Indigenous Australians generally experience poorer outcomes in terms of employment, education, income and housing.
Through COAG, governments have acknowledged that there needs to be a much stronger effort in urban and regional areas to ensure that Indigenous Australians benefit from investments in schooling, housing, skills development, health care and other services. Future action with COAG will focus on improved coordination of service delivery, and collaborating with the business and community sectors to further advance reform in addressing Indigenous disadvantage. Engagement with key business and community sector groups has already begun. Together with reforms to the Community Development Employment Projects program and Indigenous Employment Program announced in December 2008, this joint effort will pave the way for improved educational, vocational training and employment outcomes for Indigenous Australians.
FaHCSIA's primary assistance to senior Australians is through the Age Pension, which is the single largest outlay by the Department. Currently, three out of four Australians over the age of 65 are on the Age Pension, and 60 per cent of these are on a maximum rate of pension. The growth in private retirement savings from the Superannuation Guarantee will gradually shift the balance so that there will be more Australians on part pension than on full pension.
The global economic downturn had an adverse impact on the private retirement income and assets of many pensioners and retirees, and resulted in the unplanned loss of income for some. The Government has made adjustments to the Age Pension system in response, including more frequent updates of the value of shares and investments used in pension assets test assessments, a reduction in income test deeming rates, and the suspension of minimum drawdown requirements for account-based superannuation pensions. As a result, many seniors received increases in the pension and others became newly eligible.
In addition to these adjustments, the Economic Security Strategy measures announced in October 2008 included a down payment on pension reform of $4.9 billion to Australia's four million pensioners, seniors, carers and veterans, providing them with immediate financial help as they awaited the outcomes of the Pension Review.
This year, Australia marked the centenary of the Age Pension. This celebration coincided with the Pension Review, which undertook a comprehensive review of the pension system. The review concluded that the basic structure of Australia's system, with its focus on poverty alleviation, indexation to community living standards and prices and means testing to target payments to those most in need, is sound.
Alongside the Pension Review reforms, the Department has established a number of new international social security agreements with Greece, Japan, Finland and Korea, and a supplementary agreement with Germany. These agreements help people who are travelling or resident in other countries to access their pension payments, and play an important role in strengthening Australia's bilateral relations.
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As the population ages, increases in the proportion of people with disability are anticipated to have a large impact on the demand for disability services. In 2006 the National Centre for Social and Economic Modelling projected that by 2031 the number of people requiring care is estimated to increase considerably, with older Australians with disability over 65 years of age projected to increase from 350,000 to 882,000 (150 per cent), and those over 85 years of age projected to increase from 80,000 to 260,000 (more than 200 per cent). The number of younger people with disability (under 65 years) is projected to increase by 25 per cent.
By contrast, over the same periods, the number of carers is projected to increase by only 74 per cent, from 208,000 to 363,000. Innovation in the design and delivery of services and policy responses to support the needs of people with disability and their carers will be important issues to consider in the future. Carers play an important role in our society, both for the people that they care for and the contribution they make to the community. Unfortunately, carers are at significant risk of social and economic isolation and often face more financial pressure than non-carers, as well as lower physical and psychological wellbeing and problems accessing services and support.
Again, as the population ages and the projected increase in people with disability occurs, the demand for informal carers will also increase, as will the risks they face in committing to a role as carers. The Government recognises the role of carers and supports them through payments to individuals and funding of community organisations that offer support services. The Government's Secure and Sustainable Pension Reform package included a significant boost to pensioners receiving Disability Support Pension and Carer Payment. Carer Payment (child) has also been expanded, with changes coming into effect from 1 July 2009. The Government introduced a new Carer Supplement in the 2009–10 Budget, in recognition of the significant financial pressures carers face. It replaces ad hoc bonuses with an annual payment of $600 to recipients of Carer Allowance for each person being cared for.
Mental illness can impair a person's development, education and career and diminish their quality of life. Nearly one in five, or more than three million, Australians are affected by a mental illness in any one year. Severe mental illnesses are less prevalent and affect around two and a half per cent of the population at any one time.
The annual cost of mental illness in Australia is estimated at $20 billion, including the cost of lost productivity and labour force participation. The COAG National Action Plan on Mental Health 2006–11 emphasises the need for coordination and collaboration between government, private and non-government providers to address this issue through building a more connected system of health care and community supports for people affected by mental illness. The action plan continues to set the framework within which FaHCSIA is designing and progressing its mental health policies and programs.
Prevention and early intervention can contribute to a reduction in the incidence of severe mental illness through enabling the community and family members to recognise the early signs or onset of mental illness and to recommend or provide appropriate interventions. Giving education, training and support to family members and carers of those with mental illness helps to build more resilient families and communities, and makes possible more effective support and participation for those with mental illness.
Australian and international evidence confirms that the early years of a child's life are critical to future development. It is at this time that a child's brain is rapidly developing and the foundations for learning, behaviour and health over the life course are set.
A number of early childhood risk factors can have an impact on childhood outcomes. These include poor attachment or poor social skills; parenting styles; family factors and life events; and community factors such as socio-economic disadvantage and availability of support services. FaHCSIA has a number of programs aligned to the Australian Government's social inclusion priorities, which seek to enhance protective factors to offset the impact of these risk factors.
A child-centred approach to family policy aims to ensure that programs promote the best interests of children and help to protect them from poor life outcomes. Through a variety of payments, programs and policies, FaHCSIA seeks to support families and enable them to better manage life's transitions and contribute to building stronger, more resilient communities by maintaining healthy family relationships.
Over the past decade there has been a significant increase in the number of reported incidents of child abuse and neglect. Indigenous children remain significantly over-represented in this group. Governments have adopted an early intervention and child-centred approach to ensure policy and programs improve the safety and wellbeing of all Australian children. Recognising that 'protecting children is everyone's business', COAG endorsed the National Framework for Protecting Australia's Children in April 2009. The framework outlines strategies to address key challenges in children's policy over the next 12 years.
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The Paid Parental Leave schemeIn February 2008, the Government asked the Productivity Commission to undertake a public inquiry into paid maternity, paternity and parental leave.
The inquiry invited public submissions and initially received 253 submissions, including one from FaHCSIA in June 2008. Further submissions were invited after the release of the draft report in September 2008 and public consultations were held around the country.
Throughout the inquiry, FaHCSIA worked collaboratively with the Productivity Commission, providing advice on interactions of a Paid Parental Leave scheme with the current system of family payments. The final report of the inquiry was provided to Government on 2 March 2009 and publicly released on 12 May 2009, along with the Government's plan to implement most of its recommendations.
In response to the final report, the Government introduced a Paid Parental Leave scheme as part of the 2009–10 Budget, to commence from 1 January 2011. The scheme aims to enhance child and maternal health and development, facilitate workforce participation by offsetting the disincentives to paid work generated by social welfare and taxation arrangements and promote gender equity and family work–life balance.
Strong families are vital to the happiness and wellbeing of their members and communities, as well as the economic and social wellbeing, strength and vitality of Australian society. Major demographic, social, and economic changes, coupled with changes in social attitudes, have led to an increase in diversity of family types over the last 30 years. These environmental shifts formed the impetus for two reforms for families this year.
Assisting families to find a better balance between their work and caring responsibilities is an important element in the Australian Government's support for families. The new Paid Parental Leave scheme will have a number of significant benefits to families. Parents will be able to stay at home longer to provide full-time care during the vital early months of social, cognitive and physical development, giving babies the best start in life. The scheme will also advance broad social objectives such as increased gender equity and balance between paid work and family by encouraging women to maintain their connection with the workforce and their careers. It is an essential element in preparing Australia for the challenges of an ageing population.
On 16 February 2009, Minister Macklin announced the establishment of the Family Support Program. This program will work with and support families and nurture children to enable them to better manage life's transitions and contribute to building stronger, more resilient communities. It is a national program that brings together a number of existing family, parenting and children's services with a common interest. It has three core streams of services and a strong collaborative approach, with better alignment and linking of services.
The increase in the diversity of family types has required the design of government policy, programs and services to be widened to consider the varying needs of these families. Recent legislative changes have removed differential treatment between same-sex and different-sex couples and their children in areas such as social security, family assistance, child support, tax, superannuation, health and aged care. These changes reflect the evolving nature of family policy.
FaHCSIA seeks to improve the economic and social outcomes of women through the promotion of gender equality and increasing their safety and economic security. Women's and men's roles have undergone significant change over the past few decades, and it is important that this is reflected in policy to ensure that Australian women are equally recognised and rewarded for their contribution to the economy and society. Women's and men's roles in supporting and raising a family have also changed and it is important that government policy reflects contemporary aspirations of men and women to be both carers and earners in their families.
While gender equality has significantly advanced over recent decades, women still lag on a number of significant statistics. On average, women who work full-time earn 17 per cent less than men. It is estimated that an average 25-year-old woman starting work today will earn $900,000 less than a 25-year-old man over her working life and will have significantly less in retirement savings. This is mainly attributable to the reduction in women's workforce participation during peak child-bearing years. Women are also more likely to work in part-time or casual positions, and undertake caring responsibilities, further compounding the lifetime earnings gap.
Unfortunately, violence against women continues to be a challenge for the Australian community. One in three Australian women will report being a victim of physical violence, and almost one in five will report being a victim of sexual violence in their lifetime. In addition to the psychological and physical suffering of victims, it is estimated that violence against women costs the nation approximately $13.6 billon every year.
In March 2009, the National Council to Reduce Violence against Women and their Children handed its report, Time for Action: The National Council's Plan to Reduce Violence against Women and their Children, 2009–2021, to the Government. The plan includes recommendations to tackle the unacceptable levels of sexual assault and domestic and family violence in Australia and provides clear directions for the future.
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Access to affordable housing options, particularly for those most in need, remains a key social and economic challenge for Australia. In its first State of Supply Report, the National Housing Supply Council identified a number of current influences on supply and demand. These included the impact of the present global financial crisis, the excess of demand over supply, both present and projected, and how high housing costs affect lower-income home buyers and tenants.
Over the year, Australia has seen a significant reduction in the official cash rate, which has translated into the lowest variable home loan rates for 40 years. However, a shortage in housing supply continues to drive both home purchase and rental costs to levels that are very hard to reach for many Australians. Continuing to work on supply-side issues at Commonwealth, state and territory levels and through collaboration with business will remain a priority.
Across Australia, around 105,000 people are homeless on any given night. Increasingly, those experiencing homelessness include children, families and older people. The experience of homelessness is usually linked to other issues including long-term unemployment, mental illness, substance abuse, and family and relationship breakdown and violence. The shortage of affordable housing also increases the incidence of homelessness and may become more prevalent as unemployment rates increase as a result of economic conditions.
The National Affordable Housing Agreement sets out a number of measures that seek to address housing affordability and combat the issue of homelessness including social housing, assistance to people in the private rental market, specialist services for people who are homeless or at risk of homelessness and strategies to improve affordability of home ownership.
As part of the Nation Building—Economic Stimulus Plan the Government committed $5.64 billion over three and a half years, from 2008–09 to 2011–12, to the new Social Housing Initiative. This sum includes $400 million over two years for repairs and maintenance to existing public housing dwellings.
The Social Housing Initiative represents a commitment by the Australian Government and state and territory governments to significantly increase the supply of social housing throughout Australia and provide much-needed accommodation to many disadvantaged Australians, particularly those who are homeless or at risk of becoming homeless. With the assistance of the not-for-profit housing sector, the initiative is expected to deliver up to 19,200 new social housing dwellings and refurbish 60,000 existing public and community housing dwellings.
In the community support and recovery area, 2008–09 has been a very significant year for FaHCSIA, which played a key role in providing assistance to Australians affected by disaster.
FaHCSIA implemented the Australian Government Disaster Recovery Payment and a range of other immediate assistance measures, including Funeral/Memorial Assistance, the Income Recovery Subsidy, and additional emergency relief in response to the Victorian bushfires and other disasters throughout the year.
The global financial crisis has led to an increased demand for services provided by the community sector, particularly from people who have not traditionally sought such help. Demand for emergency relief and financial counselling increased significantly. In April 2009, Minister Macklin announced the Financial Management Program to help Australians deal with immediate crises and build financial capability and resilience.
The National Information Centre on Retirement Investments Inc. (NICRI) is a free and confidential service that helps provide independent information on topics including saving and investing for retirement, reverse mortgage and equity release issues. In 2008–09 NICRI received additional funding under FaHCSIA's Financial Management Program to put in place a reverse mortgages pilot project following a significant increase in enquiries from the public. NICRI provided information products and advice on reverse mortgages for people who were not able to build significant superannuation investments during their working life. This project has been funded for a further two years to provide people with quality information during this period of economic downturn.
The increased pressure on the not-for-profit sector as a result of the economic downturn means that it needs to build strong partnerships with government. As part of the Government's social inclusion agenda, FaHCSIA is leading the development of a national compact with the community sector, demonstrating the Government's commitment to a more effective relationship. In 2008 the Government consulted widely with the sector about the concept of a national compact. This consultation led to the formation of a National Compact Joint Task Force with representatives from the third sector, local government, the Australian Council of Trade Unions and Australian Government officials. The task force is providing advice on the wording of the compact, and the development of a consultation strategy and implementation plan including monitoring and reporting. This advice will inform a wider consultation leading to the development of a draft compact by December 2009.
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FaHCSIA seeks to make a significant difference to the social and economic capacity of Australians through our policy advising role, various payments to individuals, and the funding and provision of services and programs, both directly and in partnership with state and territory governments.
The Australian Government's social inclusion agenda seeks to reduce disadvantage, increase social, civil and economic participation, and to give people a greater voice in the decisions that affect them.
This agenda is closely aligned with FaHCSIA's activities, which seek to address disadvantage, protect the vulnerable, encourage people to participate in their communities and deliver greater equity. Through these activities FaHCSIA furthers social justice and equity in the Australian community.
Many volunteers support the not-for-profit organisations that provide vital services to the most disadvantaged in Australia. FaHCSIA is developing a national volunteering strategy, which recognises that volunteering creates social cohesion, engenders a sense of belonging, and encourages active citizenship. The strategy will be launched in 2011 to coincide with the 10-year anniversary of the International Year of Volunteers.
FaHCSIA's second Reconciliation Action Plan, 2008–09, builds on the achievements of the first, reflecting the Government's agenda and setting our path for building reconciliation at an organisational level. Key initiatives of the second plan include:
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