Indigenous Expenditure Report 2017

Key points

This Report provides estimates of Australian, State and Territory government expenditure for Aboriginal and Torres Strait Islander Australians across more than 150 expenditure categories. When combined with other information, the estimates contribute to a better understanding of the adequacy, effectiveness and efficiency of government expenditure on services to Aboriginal and Torres Strait Islander Australians. Expenditure may be compared across all States and Territories, and for Aboriginal and Torres Strait Islander, non‑Indigenous and all Australians.

In 2015‑16, total direct government expenditure on Aboriginal and Torres Strait Islander Australians was estimated to be $33.4 billion, a real increase from $27.0 billion in 2008‑09.

In 2015‑16, the estimated expenditure per person was $44 886 for Aboriginal and Torres Strait Islander Australians, around twice the rate for non‑Indigenous Australians ($22 356); a similar ratio to previous years in this Report ¹. The higher per person expenditure (difference of $22 530) reflects the combined effects of:

• greater intensity of service use ($14 349 or 63.7 per cent) — because of greater need, and because of the younger age profile of the population
• higher cost of providing services ($8181 or 36.3 per cent) — for example, because of more remote locations, or because targeted services are provided in addition to mainstream services (for example, Indigenous liaison officers in hospitals).

In 2015‑16, Indigenous specific services (targeted expenditure assumed to relate exclusively to Aboriginal and Torres Strait Islander Australians) accounted for 18.0 per cent of direct expenditure on Aboriginal and Torres Strait Islander Australians, a decrease from 22.5 per cent in 2008‑09. Mainstream services (expenditure available to all Australians through services and programs — for example, school education) accounted for 82.0 per cent, an increase from 77.5 per cent in 2008‑09.

The Australian Government accounted for $14.7 billion (43.9 per cent) of direct Indigenous expenditure in 2015‑16, a real increase of $2.2 billion (17.5 per cent) from 2008‑09. The remaining $18.8 billion (56.1 per cent) was provided by State and Territory governments, a real increase of $4.3 billion (29.7 per cent) from 2008‑09.

This report does not assess the adequacy, effectiveness and efficiency of government expenditure on Aboriginal and Torres Strait Islander Australians. To do this requires the ability to link expenditure to individuals, and then determine the causality of that expenditure on outcomes (such as through a cost benefit evaluation). This is outside the scope of this report.

Direct expenditure by building block

The Key Points (above) provides high level information on Australian, State and Territory governments’ estimates of expenditure for Aboriginal and Torres Strait Islander Australians, including disaggregations by type of expenditure (Indigenous specific and share of mainstream) and over time (between 2008‑09 and 2015‑16).

Expenditure is further disaggregated across six broad areas that relate to the National Indigenous Reform Agreement and Overcoming Indigenous Disadvantage report building blocks: early child development and education and training; healthy lives; economic participation; home environment; safe and supportive communities; and, other government services. See the Glossary for details on expenditure categories in each building block.

In 2015‑16, expenditure per person for Aboriginal and Torres Strait Islander Australians was highest for safe and supportive communities ($10 948) and lowest for home environment ($4197). Expenditure on healthy lives, early childhood and education and other government services have shown upward trends since 2008‑09, while there has been a decrease for safe communities and for home environment (reflecting a decrease in Indigenous specific expenditure). Expenditure for economic participation has remained relatively stable (figure 1).

^a Includes Australian, State and Territory governments direct expenditure. ^b Expenditure data adjusted in real terms to 2015-16 dollars.

Source: 2017 Indigenous Expenditure Report, tables W2, W4, W6, W8.

The proportion of government expenditure across building blocks differs for Aboriginal and Torres Strait Islander Australians and non-Indigenous Australians (figure 2). The largest proportion of expenditure per person for Aboriginal and Torres Strait Islander Australians was on safe and supportive communities (24.4 per cent), and for non‑Indigenous Australians it was on economic participation (23.2 per cent).

Figure 2 Expenditure on Aboriginal and Torres Strait Australians and non‑Indigenous Australians, by building block (per cent) 2015-16^a

^a Includes Australian, State and Territory governments direct expenditure.

Source: 2017 Indigenous Expenditure Report, tables W.17-18.

Direct expenditure by State and Territory

The Key Points (above) for the 2017 Indigenous Expenditure Report provides high level information on Australian, State and Territory governments’ estimates of expenditure for Aboriginal and Torres Strait Islander Australians, including disaggregations by type of expenditure (Indigenous specific and share of mainstream) and over time (between 2008‑09 and 2015‑16).

Expenditure is further disaggregated across the eight States and Territories, including between Australian, State and Territory governments.

In 2015‑16, expenditure per person for Aboriginal and Torres Strait Islander Australians was highest in the Northern Territory ($68 186) and lowest in Tasmania ($29 602). Expenditure per person has increased since 2008‑09 in all States and Territories except for the Northern Territory (the latter due in part to a decrease in Australian government expenditure to the NT) (figure 3).

Figure 3 Expenditure on Aboriginal and Torres Strait Islander Australians, by type of expenditure and level of government, by state and territory, by year^{a, b}

^a Includes Australian, State and Territory governments direct expenditure. ^b Expenditure data adjusted in real terms to 2015-16 dollars.

Source: 2017 Indigenous Expenditure Report database (All government direct real table; tables P.1 and P.2).

The proportional split of government expenditure between States and Territories differs for Aboriginal and Torres Strait Islander Australians and non-Indigenous Australians (figure 4). For non-Indigenous Australians, it is close to the population share for all jurisdictions. For Aboriginal and Torres Strait Islander Australians, the proportion of government expenditure for NSW, Queensland and Tasmania is lower than their population shares, whereas for WA and the Northern Territory it is higher which could reflect in part higher intensity of service use or higher service costs  (see Key Points above for further information on these concepts).

Figure 4 Proportion of all government direct expenditure on Aboriginal and Torres Strait Australians and non-Indigenous Australians, by State and Territory, 2015-16,^{a, b}

^a Includes Australian, State and Territory governments direct expenditure. ^b Proportion of total population is the state population as a proportion of the national population.

Source: 2017 Indigenous Expenditure Report, table W.17; table 2.

Footnotes

1. Estimates per person are not the same as estimates per user, and must not be interpreted as a unit cost. Locate Footnote 1.

2017 Indigenous Expenditure Report

An estimated $33.4 billion of Australian, State and Territory government expenditure was spent on services provided to Aboriginal and Torres Strait Islander Australians in 2015-16, according to the 2017 Indigenous Expenditure Report.

Around 18 per cent of this expenditure was on targeted programs for Aboriginal and Torres Strait Islander Australians, and the remainder was through non-targeted, or mainstream, services. Since 2008-09 (and after adjusting for inflation), targeted expenditure has remained relatively constant at around $6.0 billion, while expenditure on mainstream services has increased by almost one-third (from $20.9 billion to $27.4 billion).

Per head of total population, expenditure (targeted and mainstream) equated to $44 886 per Aboriginal and Torres Strait Islander Australian, around twice the rate for non-Indigenous Australians ($22 356) and similar to ratios previously reported back to 2008-09. Around two-thirds of the higher per person expenditure for Aboriginal and Torres Strait Islander Australians is accounted for by greater intensity of service use (reflecting greater need and younger age profile), with the remaining one-third accounted for by the higher cost of providing services (such as in remote locations).

Peter Harris, Chairman of the Productivity Commission and Chair of the Steering Committee for the Review of Government Service Provision emphasised the importance of robust, public evaluations to understand the adequacy, effectiveness and efficiency of government spending, something which is outside the scope of this report. 'Understanding which policies and programs deliver outcomes effectively is vital for Aboriginal and Torres Strait Islander Australians, and all Australians. Without understanding what works and why, we cannot say if money is being well spent' he said.

The full suite of information on this report, including the report, data tables and a ‘how to’ video for accessing the 2017 report data can be found at: https://www.pc.gov.au/ier2017

The report is produced by the Productivity Commission for the Steering Committee for the Review of Government Service Provision. It is the fourth in the series.

The caveats below relate to specific purpose categories of expenditure in the IER.

General — caveats relevant to all jurisdictions

Aboriginal and Torres Strait Islander share of mainstream expenditure — accuracy of these data may be affected by:

• where data on Aboriginal and Torres Strait Islander service use are available, under-identification of Aboriginal and Torres Strait Islander people in relevant administrative collections may result in a reduction in the share of expenditure being reported
• where data on Aboriginal and Torres Strait Islander service use are not available, estimates based on population share may not reflect service use share and the greater the difference the lower the accuracy of the estimates.

Indigenous specific expenditure — relies on accurate identification by Australian, State and Territory governments of Indigenous specific programs. Where a program is not correctly identified as such it will be allocated to mainstream expenditure and only a portion of the expenditure related to Aboriginal and Torres Strait Islander Australians:

Change over time — Caution should be exercised when interpreting changes in expenditure over time, particularly for more lower level GPC categories, as:

• changes in the nature of a program over time can result in a change to its allocation under the GPC
• changes in government policies over time can cause significant movements in expenditure. New programs may lead to additional expenditure with a different allocation. Further, the completion of an extensive project may lead to reduced expenditure on a category in later years, whilst not necessarily signifying a reduction in service provision
• changes in the machinery of government, information systems and accounting policies may result in different allocations of expenditure over time.

Jurisdiction-specific

Australia

GPC code 0621.3 — Australian Government expenditure for years prior to 2015-16 is overstated as it included child support payment transfers between parents. Data for 2015-16 should not be compared to previous years for this GPC code.

New South Wales

GPC 03 codes — reduction in Indigenous specific expenditure from 2012-13 to 2015-16 is due to a reduction in Indigenous specific programs.

GPC 12 codes — increase in expenditure for all Australians is due to an expansion of community and regional transport programs.

Victoria

GPC code 0320  — machinery of government changes between 2012-13 and 2015-16 included the Victorian courts and tribunals moving from the Department of Justice to a separate agency, Court Services Victoria. This resulted in the establishment of transfers between these agencies where previously there were none as they were within the one agency.

GPC code 0711.2 — inconsistencies in categorisation of expenditure prior to 2015-16 means that these data are not comparable with data for 2015-16.

GPC code 12 — inconsistencies in categorisations of expenditure at the sub-level (for GPC 121, 1231 and 1233) prior to 2015-16 means that these data are not comparable with data for 2015-16.

Queensland

Government services related to Aboriginal and Torres Strait Islander Queenslanders are provided through both targeted and mainstream services. Queensland government noted that providing quality, consistent expenditure data on this basis was again challenging, particularly at a disaggregated level.  They added it has often not been possible to determine the precise cause for a shift in reported expenditure for many GPCs, between one or more of the following factors:

• increasing complexity of social service delivery and the associated challenges of attributing expenditure between discrete GPC categories;
• changes to machinery of government resulting in expenditure categorised to certain GPCs being the responsibility of different departments over time, with differences of interpretation and lack of historical exposure to the IER collection in some agencies causing changes in expenditure recorded against those GPCs; and/or
• different priorities of governments (that is, whether the changes in figures represent a discrete decision of the government of the day to increase or reduce expenditure on an area covered by a particular GPC).

GPC code 0390 — the creation of the Public Safety Business Agency in 2013 has resulted in a significant increase in expenditure for GPC 0390 and some reductions in expenditure across other GPC 03 codes.

GPC code 051 — Acute care services in Indigenous communities has been re-classified from Indigenous-specific to mainstream (in line with the definition provided for these services). This has resulted in a decrease in Indigenous-specific expenditure for GPC 051 in 2015-16 compared to 2012-13.

GPC code 06 — machinery of government and policy changes have resulted in changes in expenditure allocations between sub-level codes between 2012-13 and 2015-16 (in particular, GPC 0610, 0629 and 0690.

GPC codes 1331 and 0422 — machinery of government changes in the vocational education and training sector have resulted in a shift of expenditure between 2012-13 and 2015-16 from GPC 0422 to GPC 1331.

Western Australia

GPC code 03 — a new cost allocation system was introduced by WA Police in 2013-14 which has resulted in a change in the Aboriginal and Torres Strait Islander share of mainstream expenditure in GPC 03 and sub-level codes.

GPC code 0623 — the first expenditure relating to NDIS payments has resulted in an increase in GPC 0623 in 2015-16 compared to 2012-13.

South Australia

Nil caveats.

Tasmania

Nil caveats.

Australian Capital Territory

Nil caveats.

Northern Territory

GPC codes 0449 and 054 — reassessment of expenditure allocations has resulted in redistribution amongst sub-level codes for 2015-16 data.

The glossary of terms used in the Indigenous Expenditure Report 2017.

The acronyms and abbreviations used in the Indigenous Expenditure Report 2017.

Two manuals related to the 2017 Indigenous Expenditure Report.

Expenditure Data Manual

Definitions and guidelines for the collection of data used to estimate expenditure on services for Aboriginal and Torres Strait Islander and non-Indigenous Australians.

• 2017 IER Expenditure Data Manual (PDF - 1100 Kb)
• 2017 IER Expenditure Data Manual (Word - 479 Kb)

Service Use Measure Definitions Manual

Definitions, concepts and methods used to prorate mainstream expenditure between Aboriginal and Torres Strait Islander and non-Indigenous Australians.

• 2017 IER Service Use Measure Definitions Manual (PDF - 1355 Kb)
• 2017 IER Service Use Measure Definitions Manual (Word - 696 Kb)