Expenditure on Indigenous Affairs and Social Services
in the Northern Territory
Coalition Senators' Dissenting Report
Coalition senators believe
this inquiry has exposed serious questions about the spending priorities and
accountability mechanisms of the Northern Territory Government, in particular
with respect to spending on programmes affecting its substantial indigenous
population.
Key witnesses claimed that
the NT Government underspent on a range of social welfare programmes by
hundreds of millions of dollars, as measured against standardised
"assessed spending" figures calculated by the Commonwealth Grants
Commission. In the words of NTCOSS:
The spending
priorities of the NT Government exacerbate the differences in measures and
senses of equality for low-income and disadvantaged people, thereby
contributing to the reduced life expectancy, poor health, violence and other
differences that they are intended to address.[1]
Grants Commission
Methodology
At the heart of this inquiry
was the appropriate use to be made of Commonwealth Grants Commission
"assessed expenditure" figures for states and territories. These
figures assist the Commission to determine what states and territories would
have needed to spend to provide the Australian average level of service in
each of its reference periods.
In evidence before the
inquiry, the Grants Commission was, properly, very careful to avoid being drawn
into making any judgement of the appropriateness of government expenditure in
the NT. In doing so it emphasised the limitations of the work it does,
implying that it would be unwise to draw practical conclusions from its
assessments. Of course a very practical conclusion, the distribution of GST
revenue, is drawn from them.
However, that caution noted,
it is equally clear that the assessed expenditure figures are not simply
abstract integers. They are adjusted to reflect conditions and factors
prevalent in individual jurisdictions, and are carefully and professionally
formulated with input from the jurisdictions affected by them. They do
reflect, in at least an approximate sense, the real fiscal effort required to
provide the services in question to that particular community.
Ms Prince, NT Under Treasurer, noted that the Grants Commission
processes reflected the actual cost of service provision in the Territory. Having
stated that "...the demographic influences and the proportion of Indigenous
people influence our services greatly" she went on to say that "[t]hese
influences result in a far greater demand for and cost of government services
in the Territory. It is those issues that are taken into account by the Commonwealth
Grants Commission."[2]
The assessments are based on
actual expenditures by states and territories and they go into a considerable
level of detail. Similarly the adjustments made to these figures are based on
hard data from authoritative sources, particularly the Australian Bureau of
Statistics.
For example, Education is
analysed in eight sub-categories and Health and Community Services in nine. Each
sub-category is then examined in further detail. Transport of Rural School
Children (which was the subject of some discussion in Darwin) is
examined under four sub-headings; Efficiency of Service Delivery, Number of
Students, Distance Travelled and Type of Road:
The Commission aims to identify why
it costs some States more to provide transport to and from school for rural
school children and then using this information to estimate what it would cost
each State to provide the service using the average policy and practice of all
States.
[The CGC] attempts to quantify how
a State varies from the average in some underlying characteristic (for example,
the proportion of its student population attending government schools) and what
effect such a variation could have on its total expenses. Bringing them
together shows how much a State could be expected to vary from the average,
solely because of its innate characteristics.[3]
The Commission process to
deliver this outcome is described in considerable detail:
|
Box 4: Socio-demographic
composition factor
Step 1: Calculate the number of primary aged children and
secondary aged children in the population
The number of children aged 5 to 11 and aged 12 to 17 were
obtained from the 2001 Census.
Step 2: Calculate the number of children requiring
transport
The Commission estimated:
Step 3: Calculate the proportion of rural school students
requiring transport
The proportion of primary school children requiring
transport was obtained by dividing the number of requiring transport (from
Step 2) by the number of children in the population (from Step 1). This was
done separately for the two age groups (5 to 11 and 12 to 17).
Step 4: Calculate the number of rural school children
requiring transport
The number of rural school children requiring transport was
calculated by:
Step 5: Calculate the State ratio
The ratio for each State and Australia is calculated by
dividing a State’s assessed rural school students requiring transport by its
population. [4] |
The factors considered get
down to the level of detail of the type of road travelled – whether sealed or
unsealed - and the figures for this are derived from AustRoads data.
Acknowledging all the
qualifications – that these figures are based on the previous five years
expenditures; that they are made prior to budget decisions for the upcoming
financial year, etc – Coalition senators believe the assessed expenditure figures
do therefore provide a realistic, general estimate of approximately what a
jurisdiction would need to spend to provide an average level of service.
In a paper prepared for the
NTER Review, co-authored by a former secretary of the Grants Commission, the
following comment was made with regard to NT expenditure in the 'Services to
Indigenous Communities' category:
[the Grants Commission assessment
results] ... should be treated with some caution. However they probably do
indicate a decision by the NTG to spend less than the national average on
community infrastructure, management and municipal services.[5]
The current secretary of the CGC did not
accept Senator Humphries'
comment that he, Mr Spasojevic, was suggesting that "...you should not make
comparisons between what states actually spend and what [the CGC]
assessed", and stated that:
...you can use the data however you
see fit as long as you are aware of the health warnings.[6]
The
Government senators' report attempts to throw doubt on the reliability of using
the Grants Commission figures in the present context. However, Coalition
senators feel this approach overlooks the important point that the variations
between the Grants Commission's assessed expenditure and the NT's actual
expenditure are huge, at least in certain key service delivery areas. The
following gaps between notional expenditure and actual expenditure cannot be
explained by statistical anomalies or shades of difference in policy
approaches:
|
Category of Expenditure
|
CGC Assessment
$m
|
Actual Expenditure
$m
|
Over (under) spending
$m %
|
|
Family & Child Services
|
178.693
|
42.982
|
(135.711)
|
(75.9%)
|
|
Aged & Disabled Services
|
65.617
|
61.627
|
(3.990)
|
(6.1%)
|
|
Services to Indigenous Communities
|
217.890
|
110.330
|
(107.560)
|
(49.4%)
|
|
Homeless & General Welfare
|
61.886
|
48.448
|
(13.438)
|
(21.7%)
|
|
Housing
|
136.201
|
120.536
|
15.665)
|
(11.5%)
|
|
First Home-Owners scheme
|
8.820
|
8.820
|
|
|
|
TOTAL COMMUNITY SERVICES
|
669.107
|
392.743
|
(276.364)
|
(41.3%)
|
|
|
|
|
|
|
|
Police
|
165.729
|
136.223
|
(29.506)
|
(17.8%)
|
|
Administration of Justice
|
83.994
|
84.598
|
|
|
|
Corrective Services
|
132.989
|
67.782
|
(65.207)
|
(49.0%)
|
|
Public Safety
|
46.523
|
27.248
|
(19.275)
|
(41.4%)
|
|
TOTAL JUSTICE, CORRECTIVE & SAFETY
|
429.235
|
315.851
|
(113.384)
|
(26.4%)
|
Indeed, it is worth observing
that the NT Government made little attempt during the Darwin hearings to offer
any breakdown of the reasons for these vast differences, preferring instead to
point repeatedly at the unreliability of the Grants Commission's assessed
expenditure figures as a measure against which to judge NT spending efforts.
NTCOSS rejected the notion
that the Grants Commission evidence had invalidated the thrust of its
submission:
In this context, I refer to the evidence given by Mr John Spasojevic,
Secretary of the CGC. He confirmed:
- That the CGC .put out a data request every year asking
(the States and Territories) for a break down of their expenditure in certain
categories which align with the ABS government financial statistics
classification, and they provide us with data consistent with that that we can
use in our work. (Transcript of Canberra Hearings page CA5).
- "..every year we would get revised numbers for a new year on how
much the states actually spent in those different categories. (Transcript of
Canberra Hearings page CA 2)
- "The ABS has a classification which is common across all the
states to which the states report data for government financial statistics. We
use the same break-up and the states go to the task of allocating those things
on a consistent basis in a comparable way across the states.. (Transcript of
Canberra Hearings page CA6).
Mr Spasojevic also issued two cautions ("health warnings"):
- the GST pool distribution to states and the state budgets are both
prospective documents, not retrospective, and there is therefore an element of
uncertainty as to what the final figures will be; and
- difficulties can arise when one draws correlations between the
policies of different states.
NTCOSS’ original submission is entirely consistent with Mr Spasojevic.s
explanation of the data processes.
With regard to his cautions, we believe the differences between CGC
assessments and NT actual expenditure are so extreme over a period of years as
to render irrelevant the first warning.
Concerning the second warning, NTCOSS has not attempted to draw policy
correlations between states.[7]
Service Delivery &
Outcomes
Funding inputs are one
measure of how well governments are addressing social problems. Another,
better measure is outcomes.
Chapter 3 of the Government
senators' report provides a brief summary of current statistics on outcomes.
These come from independent bodies such as the Productivity Commission and the
Australian Institute of Health and Welfare. At the Territory-wide level they
show that outcomes are not good and that even where improvements have occurred
the gap between Indigenous and non-Indigenous Australians is not narrowing in
key areas of Health, Education and Employment.
At the community level a
report on Thamurrurr (which includes Wadeye) provides a more detailed illustration
of this dilemma. A 2005 report, The Opportunity Cost of the Status Quo in
the Thamarrurr Region, concluded that "after accounting for all
government dollars and transfer payments ... far less is spent on [Thamarrurr
residents] per head than is spent on the average Territorian" and "a
key factor in this deficit is an apparent gross underspending on education at
Thamarrurr of some $3.2 million largely reflecting low levels of school
attendance."[8]
Outcomes such as those at Thamarrurr
add flesh to the contention of some witnesses that there are serious,
unaddressed problems with the spending effort of the NT Government.
Specific Purpose Payments
The
terms of reference of the committee included part (a) which reads:
the level of service delivery and of outcomes achieved in
Indigenous communities in the Northern
Territory in relation to the
expenditure of both Federal and Northern
Territory monies.
Evidence was provided to the
committee by Mr John Elferink MLA, shadow treasurer in the Northern Territory
Legislative Assembly, alleging the substitution of Federal Government specific
purpose payments (SPP) grants for Northern Territory Government
budgeted expenditure in the areas of health and housing.
The evidence specifically alleges
that the Northern Territory Government deliberately transferred budgeted
allocations out of the health budget after the Northern Territory Government
received health-related SPPs.
While the receipt of SPPs
resulted in a reported increase of expenditure by the Northern Territory
Government in the areas of health and housing, Mr Elferink suggests that the
effect of the alleged transfer of NT Government funds resulted in a decrease in
expenditure from what would have been achieved had the original NT Government
budgeted allocations remained in the Health Department budget.
The Australian Government has
provided significant financial resources to the Northern Territory to address disadvantage and poor or missing services and
infrastructure through both direct investment as well as through SPPs and CGC payments.
Despite this investment there
remains significant disadvantage and lack of services in a number of outcome
areas.
Conclusion
The concerns of community
organisations regarding the spending effort of the NT Government are, in the
view of Coalition senators, well founded. The yawning chasm between the Grants
Commission's assessments and actual spending levels were not explained to the
Committee, notwithstanding sustained attempts by senators to understand the
differences. The actual outcomes, especially in areas of Indigenous health,
housing and education indicators, add weight to these concerns.
Accordingly, Coalition
senators recommend that the Commonwealth Government formally requests the NT
Government to provide a detailed analysis of its spending levels in specified
Grants Commission-determined categories (including community services and Indigenous
affairs) where there are significant disparities between "assessed
expenditure" and actual expenditure.
Further, Coalition
senators recommend that the Commonwealth Government formally requests the NT
Government to provide a summary of the NT Government budgeted versus actual
allocation of NTG funds in areas where SPPs have been provided by the
Commonwealth.
Senator Gary
Humphries
Senator Sue Boyce
Senator Nigel Scullion
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