2.1 Describing rural and remote disability employment assistance
2.1.1 The Accessibility/Remoteness Index of Australia
While there is no clear definition of remoteness applied to disability employment assistance in Australia, the Accessibility/Remoteness Index of Australia (ARIA)
3has been used to provide a framework for identifying the extent to which disability employment assistance is currently being provided in rural and remote areas. The ARIA system has been developed by the University of Adelaide, and is becoming accepted by governments, academic institutions and other organisations as the best available indicator of remoteness.
4The University is continually updating the ARIA system, and has produced several advanced versions.
ARIA measures remoteness in terms of access along a road network to a service centre. Localities that are more remote have less access to service centres; those that less remote have greater access to service centres. In its original form, the ARIA database identifies 11,340 populated localities and 201 service centres, in Australia.
In the measurement of ARIA classification, population is used as a proxy for service availability. In the original version, a service centre has a population of 5,000 or more. More advanced versions recognise service centres with populations of 200. There is quite a strong relationship observed between population size and the availability of services. Road distance is used as an access indicator. Virtually any given locality can be identified by ARIA, and assigned a remoteness score. In the original ARIA version 5 categories of remoteness were identified as shown on Table 2.1.
Table 2.1: ARIA scores and classifications
| Classification |
Score |
Description |
| Highly Accessible |
0 - 1.84 |
Relatively unrestricted accessibility to a wide range of goods and services and opportunities for social interaction |
| Accessible |
>1.84 - 3.51 |
Some restrictions to accessibility of some goods, services and opportunities for social interaction |
| Moderately Accessible |
>3.51 - 5.80 |
Significantly restricted accessibility of goods, services and opportunities for social interaction |
| Remote |
>5.80 - 9.08 |
Very restricted accessibility of goods, services and opportunities for social interaction |
| Very Remote |
> 9.08 - 12 |
Very little accessibility of goods, services and opportunities for social interaction |
Source: http://www.health.gov.au/ari/aria.htm
These 5 categories were arbitrary divisions on a continuous scale, and were not related to other descriptors of remoteness, or rurality in common use (ie 'urban', 'rural', 'remote'). In more advanced versions of ARIA there may be 6 or 7 arbitrary categories.
For the purposes of this study 'rural and remote' is defined as areas with a Moderately Accessible, Remote and Very Remote ARIA classification.
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2.1.2 Classifying disability employment assistance according to ARIA
There were 840 disability employment service outlets funded under Part II of the
Disability Services Act 1986 operating in Australia in 1999 (Table 2.2). About 57% of these were supported employment services, and a little over one third were open employment services. This is shown in Table 2.2.
Table 2.2: Disability service outlets: Service type by ARIA classification, 1999
|
Highly accessible |
Accessible |
Moderately accessible |
Remote |
Very Remote |
Total |
| Service type |
No |
% |
No |
% |
No |
% |
No |
% |
No |
% |
No |
% |
| Open |
217 |
71.6 |
55 |
18.2 |
19 |
6.3 |
8 |
2.6 |
4 |
1.3 |
303 |
100.0 |
| Supported |
351 |
73.7 |
94 |
19.7 |
24 |
5.0 |
6 |
1.3 |
1 |
0.2 |
476 |
100.0 |
| Open and Supported |
41 |
68.3 |
9 |
15.0 |
5 |
8.3 |
3 |
5.0 |
2 |
3.3 |
60 |
100.0 |
| Other |
1 |
100.0 |
0 |
0.0 |
0 |
0.0 |
0 |
0.0 |
0 |
0.0 |
1 |
100.0 |
| Total |
610 |
72.6 |
158 |
18.8 |
48 |
5.7 |
17 |
2.0 |
7 |
0.8 |
840 |
100.0 |
Source: FaCS Disability Services Census, 1999.
There are 72 service outlets indicated as being located in Moderately Accessible, Remote and Very Remote areas, or 8.5% of all services, comprising:
- 31 open employment services (10% of open employment services);
- 31 supported employment services (7% of supported employment services); and
- 10 open and supported employment services (16% of open and supported employment services).
For the 72 outlets in the ARIA 'Moderately Accessible', 'Remote' and 'Very Remote' areas there were approximately 3,000 of consumers (5.8% of total), as shown in Table 2.3 on the following page.
Table 2.3: Number of consumers (service recipients): Service type by ARIA classification, 1999
| Service type |
Highly accessible |
Accessible |
Moderately accessible |
Remote |
Very remote |
Total |
| Open |
25,449 |
3,774 |
1,393 |
401 |
214 |
31,231 |
| Supported |
13,973 |
1,913 |
443 |
128 |
9 |
16,466 |
| Open and supported |
3,639 |
386 |
347 |
38 |
15 |
4,425 |
| Other |
103 |
- |
- |
- |
- |
103 |
| Total |
43,164 |
6,073 |
2,183 |
567 |
238 |
52,225 |
| % of total |
82.7% |
11.6% |
4.2% |
1.1% |
0.5% |
100.0% |
Source: FaCS Disability Services Census, 1999.
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The ARIA scaling system (Table 2.1) skews the population distribution to Highly Accessible and Accessible regions, compared to previous classifications of rural and remote, such as the classification used by the Australian Institute of Health and Welfare (AIHW). For example, under ARIA, many 'rural' centres are classified as 'Accessible', and are thus not included as 'rural and remote'. This has led a number of people to observe that ARIA, as currently constructed, does not adequately identify rurality.
The total number of outlets and consumers indicated in rural and remote locations appears relatively low when compared with AIHW data for open employment services, shown in Table 2.4 (for 1997-98).
Table 2.4: Number of open employment outlets and number of consumers by location 1997-98
| Location |
Outlets |
Recorded consumers |
Mean no. of consumers per outlet |
|
No. |
% |
No. |
% |
|
| Urban |
207 |
62 |
21,423 |
71 |
103 |
| Rural |
111 |
33 |
8,432 |
28 |
76 |
| Remote |
16 |
5 |
535 |
2 |
33 |
| Total |
334 |
100 |
30,390 |
100 |
91 |
Source: AIHW, Open employment services for people with Disabilities, 1997-98, Table 2.2, 1999.
While the total number of open employment outlets indicated is similar (334 for AIHW, 303 for ARIA), AIHW data indicates there are 127 outlets in 'Rural and Remote' locations, compared to 72 for ARIA.
A similar comparison can be made with consumers. Table 2.4 shows approximately 9,000 consumers in 'Rural and Remote' areas indicated by AIHW.
Another issue which is more apparent in the ARIA system, is 'migration' of consumers from remote to less remote (ie more accessible) areas.
Data shows that job seekers with disabilities living in Moderately Accessible and Remote locations travel to more 'Accessible' service providers to obtain a service. For example, Table 2.5 shows that in 1998 there were 383 consumers living in a Remote area. Of these, 167 (or 44%) accessed services within a Remote area, and 157 (or 40%) accessed services in a Highly Accessible area.
Job seekers in Very Remote locations appear to travel relatively less outside their area for services.
Table 2.5: Consumers of disability employment services: Consumer place of residence (ARIA) by Consumer use of service (ARIA), 1998
| Consumers lived in these areas |
Consumers accessed services in these areas |
| Highly accessible |
Accessible |
Moderately accessible |
Remote |
Very remote |
Unmatched |
Total |
| Highly Accessible |
29,254 |
92 |
9 |
2 |
6 |
2,685 |
32,048 |
| Accessible |
1,528 |
3,163 |
171 |
0 |
0 |
133 |
4,995 |
| Moderately Accessible |
337 |
163 |
954 |
18 |
0 |
102 |
1,574 |
| Remote |
157 |
12 |
35 |
167 |
12 |
0 |
383 |
| Very Remote |
3 |
20 |
5 |
15 |
143 |
0 |
186 |
| Unmatched |
146 |
104 |
6 |
8 |
37 |
197 |
498 |
| Total |
31,425 |
3,554 |
1,180 |
210 |
198 |
3,117 |
39,684 |
Source: FaCS Disability Services Census, 1998, Table 9, p 18, 1999.
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Thus, in addition to the 72 service outlets identified as 'rural and remote', there are many services located in 'Accessible' areas that provide services to job seekers with disabilities living in more remote areas. Reasons for this phenomenon include:
5
- it is natural that a proportion of job seekers with disabilities are living in more remote areas than where services are located (eg. living on a farm some distance outside a town centre);
- job seekers with disabilities may choose to travel to a major centre (by-passing a smaller town which has a disability employment service) and obtain a range of services (this may also be a choice made by their family); and
- a lack of disability employment services in the remote areas in which job seekers with disabilities are living, or a lack of adequate outreach services.
On the other hand there are relatively few consumers with disabilities living in 'Highly Accessible' and 'Accessible' areas which access services in 'Moderately Accessible', 'Remote' and 'Very Remote' areas.
The number of service outlets in rural and remote locations, as defined by ARIA, appear relatively low, compared to previous measures.
MDS data collection assigns services to urban, rural and remote based on postcodes. Postcode data are collected in two formats depending on whether data is collected on an outlet basis or on a more aggregated level. Collection at an aggregate level will understate the number of services in rural and remote areas.
While the focus of this study is on Moderately Accessible, Remote and Very Remote area, as per the ARIA classification, it needs to be recognised that there are likely to be service outlets in Accessible areas which experience remoteness. The numerical range which defines inclusion of a service for the purposes of a program response requires further investigation. The next versions of ARIA to be produced by the University of Adelaide may address this issue.
2.1.3 Rural and remote services in States/Territories
New South Wales and Queensland have the highest number of consumers and outlets in rural and remote areas, as shown on Chart 2.1.
Chart 2.1: Number of consumers and outlets in 'Rural and Remote' areas in each State/Territory, 1999 
Source: FaCS Disability Services Census, 1999
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However, rural and remote outlets and consumers are more highly represented in Northern Territory than any other State. Chart 2.2 on the following page shows the proportion of outlets and consumers in rural and remote areas in each State/Territory.
Chart 2.2: Proportion of outlets and consumers in 'Rural and Remote' areas 
Source: FaCS Disability Services Census, 1999
Data tables from which these charts were derived are shown below.
Table 2.6: Disability employment services, number of outlets by ARIA classification, 1999
|
Highly |
Accessible |
Moderately |
Remote |
Very |
Total |
|
No |
% |
No |
% |
No |
% |
No |
% |
No |
% |
No |
% |
| NSW |
220 |
68.3 |
81 |
25.2 |
14 |
4.3 |
6 |
1.9 |
1 |
0.3 |
322 |
100.0 |
| Vic |
163 |
86.7 |
20 |
10.6 |
5 |
2.7 |
0 |
0.0 |
0 |
0.0 |
188 |
100.0 |
| Qld |
86 |
66.2 |
24 |
18.5 |
14 |
10.8 |
5 |
3.8 |
1 |
0.8 |
130 |
100.0 |
| WA |
48 |
76.2 |
4 |
6.3 |
6 |
9.5 |
2 |
3.2 |
3 |
4.8 |
63 |
100.0 |
| SA |
59 |
71.1 |
16 |
19.3 |
6 |
7.2 |
2 |
2.4 |
0 |
0.0 |
83 |
100.0 |
| Tas |
22 |
64.7 |
11 |
32.4 |
1 |
2.9 |
0 |
0.0 |
0 |
0.0 |
34 |
100.0 |
| ACT |
12 |
100.0 |
0 |
0.0 |
0 |
0.0 |
0 |
0.0 |
0 |
0.0 |
12 |
100.0 |
| NT |
0 |
0.0 |
2 |
25.0 |
2 |
25.0 |
2 |
25.0 |
2 |
25.0 |
8 |
100.0 |
| Total |
610 |
72.6 |
158 |
18.8 |
48 |
5.7 |
17 |
2.0 |
7 |
0.8 |
840 |
100.0 |
Source: FaCS, Disability Census, 1999.
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Table 2.7: Disability employment services, consumers by ARIA classification, 1999
|
Highly |
Accessible |
Moderately |
Remote |
Very |
Total |
|
No |
% |
No |
% |
No |
% |
No |
% |
No |
% |
No |
% |
| NSW |
12,376 |
77.9 |
2,680 |
16.9 |
653 |
4.1 |
168 |
1.1 |
9 |
0.1 |
15,886 |
100.0 |
| Vic |
14,018 |
95.0 |
548 |
3.7 |
187 |
1.3 |
0 |
0.0 |
0 |
0.0 |
14,753 |
100.0 |
| Qld |
6,860 |
72.5 |
1,451 |
15.3 |
841 |
8.9 |
199 |
2.1 |
113 |
1.2 |
9,464 |
100.0 |
| WA |
4,519 |
88.1 |
260 |
5.1 |
187 |
3.6 |
64 |
1.2 |
101 |
2.0 |
5,131 |
100.0 |
| SA |
3,779 |
85.7 |
423 |
9.6 |
169 |
3.8 |
41 |
0.9 |
0 |
0.0 |
4,412 |
100.0 |
| Tas |
747 |
56.7 |
560 |
42.5 |
11 |
0.8 |
0 |
0.0 |
0 |
0.0 |
1,318 |
100.0 |
| ACT |
865 |
100.0 |
0 |
0.0 |
0 |
0.0 |
0 |
0.0 |
0 |
0.0 |
865 |
100.0 |
| NT |
0 |
0.0 |
151 |
38.1 |
135 |
34.1 |
95 |
24.0 |
15 |
3.8 |
396 |
100.0 |
| Total |
43,164 |
82.7 |
6,073 |
11.6 |
2,183 |
4.2 |
567 |
1.1 |
238 |
0.5 |
52,225 |
100.0 |
Source: FaCS Disability Census, 1999
2.1.4 Rural and remote outlets and areas selected for the study
A significant part of the study involved undertaking case studies and focus groups in rural and remote areas. These were selected to provide a reasonable spread and diversity of rural and remote circumstances.
Table 2.8 shows ARIA classifications for locations which were included in the study. Case studies were selected by the Steering Committee based on nominated outlets and services in each State/Territory.There were 4 case studies (ie service outlets) in Accessible locations, 3 in Moderately Accessible locations, 4 in Remote locations, and 3 in Very Remote locations.
Focus group locations were selected in order that a range of providers from the surrounding area would be able to attend. This shifted the focus away from Very Remote locations to more 'Accessible' locations. There was 1 focus group conducted in a Highly Accessible location, 5 in Accessible locations, 1 Moderately Accessible, and 3 in Remote locations.
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Table 2.8: ARIA Classifications of selected locations (included in the study as case studies or focus groups)
|
Score |
Highly accessible |
Accessible |
Moderately accessible |
Remote |
Very remote |
| Northern Territory |
|
|
|
|
|
|
| Darwin (visit) |
3.0 |
|
|
|
|
|
| Alice Springs (fg, cs) |
6.0 |
|
|
|
|
|
| Tiwi Islands (cs) |
11.0 |
|
|
|
|
|
| Tennant Creek (cs) |
12.0 |
|
|
|
|
|
| Nhulunbuy (cs) |
12.0 |
|
|
|
|
|
| Queensland |
|
|
|
|
|
|
| Cairns (fg) |
3.0 |
|
|
|
|
|
| Innisfail |
4.0 |
|
|
|
|
|
| Mareeba |
3.6 |
|
|
|
|
|
| Rockhampton (fg) |
1.5 |
|
|
|
|
|
| Mount Isa (cs) |
6.0 |
|
|
|
|
|
| Roma (cs) |
5.1 |
|
|
|
|
|
| Goondiwindi (cs) |
4.9 |
|
|
|
|
|
| NSW |
|
|
|
|
|
|
| Bega (cs) |
4.1 |
|
|
|
|
|
| Nyngan (cs) |
6.4 |
|
|
|
|
|
| Orange (fg) |
1.6 |
|
|
|
|
|
| Dubbo (fg) |
2.4 |
|
|
|
|
|
| Young (visit) |
2.0 |
|
|
|
|
|
| Western Australia |
|
|
|
|
|
|
| Broome (fg, cs) |
9.0 |
|
|
|
|
|
| Port Hedland (fg, cs) |
9.0 |
|
|
|
|
|
| Victoria |
|
|
|
|
|
|
| Nhill (cs) |
4.2 |
|
|
|
|
|
| Warracknabeal (cs) |
3.7 |
|
|
|
|
|
| St Arnaud (cs) |
2.5 |
|
|
|
|
|
| Horsham (cs) |
2.8 |
|
|
|
|
|
| Maffra (visit) |
2.0 |
|
|
|
|
|
| Mildura (cs) |
2.5 |
|
|
|
|
|
| South Australia |
|
|
|
|
|
|
| Mount Gambier (cs) |
2.2 |
|
|
|
|
|
| Bordertown (fg) |
4.8 |
|
|
|
|
|
| Port Pirie* (fg) |
2.6 |
|
|
|
|
|
| Tasmania |
|
|
|
|
|
|
| Burnie (cs) |
2.1 |
|
|
|
|
|
| Strahan |
6.2 |
|
|
|
|
|
- Source: ARIA at www.health.gov.au/ari/aria.htm.
- Note: fg = focus group location, cs = case study location, visit = outlets which were visited. Those locations with no qualifier are included as they are areas to which case study outlets provide outreach services.
Note that service outlets in Horsham, Port Pirie, and Burnie are classified as 'Accessible', yet they each provide services on an outreach basis to job seekers with disabilities living in areas classified as Moderately Accessible or Remote.
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2.2 Unmet demand in rural and remote locations
2.2.1 Historical studies
There is no reliable data which estimates demand for disability employment assistance, or which indicates whether there is higher demand in rural and remote locations compared to urban areas.
In 1996 Baume and Kay used a theoretical estimate based on ABS data, suggesting that unmet demand for employment by persons with a disability, for the whole of Australia was 38,800 people.
6 Baume and Kay also noted that 21% of DSP clients were in rural and remote areas, compared to 28% of the total population who live in rural and remote areas, suggesting that there were insufficient services in rural and remote locations.
7 Note that this does not necessarily demonstrate that there are insufficient services in rural and remote areas. As discussed below, many job seekers with disabilities travel to less remote disability employment services, or relocate to less remote areas in order to access a range of services, and possibly improved employment prospects.
In 1996 the then Department of Health and Family Services developed estimates of unmet demand for employment support for 'people with severe and profound handicaps and those with employment limitation'. The study estimated that demand for employment assistance was 44,000 to 48,000 clients, while the service provision was 38,000 to 40,000. This suggested an unmet demand of 4,000 to 10,000 people who were actively looking for work (in 1996). Thus unmet demand for assistance was estimated to be about 15%.
8There was no separate analysis of unmet demand in rural and remote locations.
Soon after the Unmet Demand Study, another study conducted by the Department of Social Security
9 observed similar levels of unmet demand. Contrary to expectations this study observed slightly lower levels of unmet demand in rural and remote locations. However, the study found that the most important factors restricting the employment of people wishing to work included suitable transport, education and training programs, and labour market factors.
While funding for disability employment assistance has increased capacity for some 10,000 additional consumers since 1996, it is not known what increase in demand may have also occurred during this periods, or where this may have occurred.
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2.2.2 Comparison of current consumer distribution with disability population
In order to determine whether there is higher unmet demand in rural and remote locations current consumer distribution was compared with estimated population of people with a disability.
ABS synthetic estimates
10 of the population of people with a disability in 1998 (aged 15-59), were grouped according to ARIA classifications.
Table 2.9 shows that consumers with disabilities appear to be under represented in employment services rural and remote areas. The number of consumers as a proportion of the disability population in Moderately Accessible, Remote and Very Remote areas were 2.85%, 2.47% and 1.17%, respectively compared to 3.12% and 2.79% in Highly Accessible and Accessible areas, respectively.
The number of consumers in Moderately Accessible, Remote and Very remote areas was 5.7% of the total. This is less than the proportion of the population of people with a disability living in these areas (7.0%).
While the analysis is inconclusive, data does suggest that there is higher unmet demand in rural and remote areas. Using different (or additional) ARIA categories to increase to the number of consumers in 'rural and remote' categories would assist in further analysis.
However, lower than average representation does not necessarily mean that demand is unmet, as many job seekers with disabilities 'migrate' from one classification to another to receive service, as noted above. This may take place as part of the job seeking process, or job seekers may re-locate, thus reducing the number of consumers in rural and remote locations.
Table 2.9: Proportion of disability population provided with employment services
|
Highly accessible |
Accessible |
Moderately accessible |
Remote |
Very Remote |
Total |
| Population of people with a disability (severe and profound) |
1,380,619 |
217,683 |
76,557 |
22,997 |
20,257 |
1,718,113 |
| No. of consumers |
43,164 |
6,073 |
2,183 |
567 |
238 |
52,225 |
| Proportion of population served |
3.12% |
2.79% |
2.85% |
2.47% |
1.17% |
3.03% |
Source: Department of Family & Community Services, estimates of disability population, 1998, and Disability Census 1999.
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Feedback from service providers in rural and remote locations concerning the level of unmet demand was equivocal in relation to unmet demand. Most providers either had waiting lists or were aware of people in their community who could benefit from employment assistance. While they were not able to quantify the level of unmet demand, there were some who suggested that their current service provision could be increased by 25-50%, given additional funding. However, it is likely that this is not solely a characteristic of rural and remote locations. (Nor was it clear that these services were operating at maximum efficiency).
While waiting lists provide one indication of unmet demand the use of formal waiting lists varies. Some providers have waiting lists, others do not. Those with waiting lists nominated waiting times of between 1 and 6 months. Other service providers are reluctant to include people on a waiting list if they consider people will have to wait so long they will become discouraged. Providers generally are reluctant to seek new job seekers, and promote their services unless they are able to deliver assistance within a reasonable time frame. On the other hand many job seekers may be on more than one waiting list.
Possible sources of unmet demand identified by providers in rural and remote locations include:
- job seekers living in remote towns not serviced by disability employment services;
- people who would like to work, but who are unaware of the existence of disability employment assistance;
- people who are currently involved in supported employment, or in day options programs, who are seeking open employment, but find it difficult to access services and the employment market;
- Indigenous people with disabilities who are not recognised as having disabilities, or who choose not to disclose their disability; and
- young people with disabilities leaving school, who would like to work, but who are not encouraged (by parents, school, others) to pursue employment.
While information from several sources suggests that there is relatively higher unmet demand for disability employment assistance in rural and remote locations, further analysis of demand is required to establish whether this is the case. Such analysis would need to address the 'migration' of job seekers with disabilities. Unmet demand as evidenced by waiting lists, is mainly due to limited capacity to provide services within existing funding levels, and a lack of employment opportunities.
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2.3 Costs in rural and remote communities
2.3.1 Recognising higher costs in rural and remote communities
The higher cost of operating in rural and remote communities is widely recognised.
11 However, there is no definitive system by which government funded services are compensated for the higher cost of service delivery in rural and remote communities. At a local level higher costs of living experienced by individuals are recognised by the Australia Taxation Office through a Zone Rebate Scheme. Higher costs are recognised at a State level by the Commonwealth Grants Commission. Both these are summarised below. The cost of operating in rural and remote locations is described using case study information. This illustrates the relative importance of particular costs and the potential difference in cost, compared to urban areas.
ATO Zone Rebates
The Australian Taxation Office uses a zoning system to provide rebates for individuals living in rural and remote communities. Zone rebates apply in a number of nominated localities.
There are effectively 3 zones - A, B and Special areas, within the meaning of sub-section 79A(3D) of the Income Tax Assessment Act. Zone rebates are calculated based on a range of eligibility criteria and individual circumstances. The zone rebate includes other rebates (spouse, sole parent) plus a zone allowance.
Table 2.10: Examples of localities within zones and special areas
| Zone A (allowance = $338) |
Zone B (allowance = $57) |
Special area (allowance = $1173) |
| Broome |
Kalgoorlie |
Exmouth |
| Port Hedland |
Bourke |
Nhulunbuy |
| Alice Springs |
Broken Hill |
Tennant Creek |
| Darwin |
Cairns |
Amata Aboriginal Community |
| Katherine |
Atherton |
Jabiru |
| Mount Isa |
Queenstown |
Milikapati |
Source: Australian Taxation Office, see for example Withholding declaration, p 23.
The dollar value of Zone and Area allowances is arbitrary and is not correlated with cost conditions within a particular town. As a result they do not provide a useful framework for establishing comparative costs with urban areas.
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Commonwealth Grants Commission
The Commonwealth Grants Commission establishes funding formulae in order to calculate the level of State Grants.
12The formulae used are complex and include weights for input costs, socio-demographic composition, dispersion, isolation and Aboriginality. The Commission also undertakes specific inquiries.
State/Territory data is available for various government funded programs. However, the Grants Commission does not generally publish information disaggregated below State/Territory level.
One way of using Grants Commission information is to assume that the 'worst case' scenario is reflected in the data for Northern Territory, for selected programs, as shown in Table 2.11 below.
Table 2.11: Examples of Standardised expenditure ($ per capita) 1998/99
|
Northern Territory |
Western Australia |
Queensland |
Australia |
| Disability Services Vocational education and training Community health |
205 309 770 |
117 165 303 |
111 156 252 |
110 155 |
Source: Commonwealth Grants Commission, Working Papers, Volume 4, pp. 106, 208, 356. 2000.
The approach to estimating standardised expenditure involves identifying various factors which affect cost, and measuring these relative to the Australian average. For example a higher proportion of older people, or people with disabilities in a State, would increase the weighting. Standardised expenditure is the expenditure that each State would incur to provide the average level of service to its target population.
In the Northern Territory the standardised expenditure for disability services and other community service areas are increased due to the dispersed nature of the population, and a higher proportion of Indigenous people. The data suggests that disability services in the Northern Territory, and in similarly remote parts of other States where there is a high Indigenous population, require nearly twice the average Australian expenditure.
The Commission's data suggests that the training component of disability employment assistance in Northern Territory might be 3 times that of the rest of Australia. The expenditure in Community Health in Northern Territory is more than double Western Australia and Queensland.
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While the Grants Commission publishes aggregate State/Territory information, it maintains considerable data bases of cost information related to specific geographic locations. It can also use data provided by other government organisations to conduct analyses, although this is not its primary role (nor can it be relied upon to conduct such analyses).
The Grants Commission is currently conducting an Inquiry into Services for Indigenous people.
14The Inquiry includes an examination of the effect of geographic location on costs. The Commission notes that the costs of providing services in remote and isolated areas is the result of
'many factors including the high costs of transport, communication, freight and general maintenance and the necessity to offer more attractive salary and conditions (including housing) to attract and keep staff'. 15 The Commission has completed locationally specific analyses as part of the Inquiry. Relative costs have been calculated for the delivery of secondary education, at a postcode level. In general, the analysis indicates that costs increase with distance from State capital city, except in Queensland where distance from the coast predominates. The Grants Commission intends to develop this work for health and other sectors.
16 Relative cost indices are shown in Table 2.12 for delivery of secondary education.
Table 2.12: Relative cost index for delivery of Secondary Education
| Relative cost index |
No. of schools |
% of total |
Examples of locations |
| 135 - 175 |
41 |
4 |
Alice Springs, Tennant Creek, Nhulunbuy, Broome, Port Hedland |
| 115 - 135 |
137 |
12 |
Katherine, Mount Isa, Nhill |
| 102 - 115 |
428 |
38 |
Darwin, Cairns, Mildura, Kalgoorlie |
| 90 - 102 |
442 |
39 |
Outer urban Melbourne, Adelaide, Brisbane, Sydney, Hobart |
| 79.3 - 90 |
89 |
8 |
Urban areas of capital cities |
Source: Commonwealth Grants Commission, Indigenous Funding Inquiry, 2000.
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Table 2.12 indicates a range in relative cost index from about 80 up to 175. Because secondary schools are centre based, these data may mainly reflect relative input costs. That is, costs are 'contained' within the secondary school where virtually all services are delivered. Service delivery activities and associated costs are not influenced by local or regional geography.
While Grants Commission information may be useful in determining relative costs for a particular location, the information is also useful to assist in the allocation of resources to each State/Territory, including employment assistance funding.
State/Territory resource allocation
States and Territories recognise rurality is various ways in providing community services. In many programs weightings are applied for rurality. This can be a reflection of higher input costs, and or lower productivity.
For example, higher input costs are recognised by hospitals in their funding formulae. In Victoria additional payments of $14 and $35 per separation are made for hospitals operating in rural and isolated areas.
Of particular interest is the Rural and Remote Equity Formula, used by the Victorian Government in allocating resources to HACC clients.
17The formula includes rural weightings based on density of HACC population. The weightings are shown in Table 2.13 below.
Table 2.13: Rural weightings applied to funding formula - HACC services in Victoria
| Target population persons per sq km |
Weighting |
| > 10 |
Nil |
| 5 - 10 |
10% |
| 2 - 5 |
20% |
| < 2 |
30% |
Source: Department of Human Services, Victoria, 2000.
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Funding is allocated on an LGA basis. The Table shows that LGAs with target populations less than 2 persons per square kilometre are treated as though their target population is 30% greater. When funding is allocated on a per capita basis, an LGA with less than 2 persons per square kilometre would receive a higher share of funds than otherwise.
The use of population density recognises the additional travel time and costs in rural and remote locations. However the formula is only used for resource allocation across LGAs, and not for individual services. Indeed RREF is considered to become less reliable for small populations.
Other Victorian programs which include weightings for rurality are shown on Table 2.14.
Table 2.14: Examples of Victorian Government programs which incorporate weightings for rurality
| Program |
Basis for weighting |
| Post Acute Care |
Geographic isolation |
| Maternal and child health services |
Rurality, based on catchment area size, population density and isolation from support services |
| Disability programs |
Rural regions receive a weighting of 5%. Indigenous population is weighted by a factor of 2. |
| Pre school programs |
An additional $1,188 per place in the rural pre-school category for up to 45 enrolments, and $1,782 per child to a maximum of $17,820 in a small rural pre-school. |
Source: Department of Human Services, Victoria.
2.3.2 Factors affecting viability
Based on the research undertaken for this study there appear to be four key factors impacting on the viability of disability employment service providers in rural and remote locations - operating costs, productivity, economies of scale, and community support. The discussion below focuses on open employment services. FaCS funded business services are discussed in Section 2.5.
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Operating costs structure of case study organisations
There has been relatively little analysis and comparison of costs between rural and remote and urban locations for disability services. In 1996, a cost study was undertaken as part of the review of the CSDA. The analysis examined the service cost by type of location of the service outlet. The average cost per hour for City, Country and Remote services for selected service types (excluding employment services) was examined, but findings were inconclusive.
18 This was due in part to a relatively small sample size (n=155, with 28 services in Country and 5 in Remote areas).
This study involved conducting detailed case studies in selected areas. The costs of providing services in rural and remote locations was discussed with each case study organisation, in more or less detail, depending on information to hand.
The estimates which are provided below should be regarded as indicative only, as they are based on the opinions and data from a small selection of organisations. In some instance data was obtained from annual reports and financial statements, and key activity data such as kilometres travelled, which was specifically sought.
The assessment of costs is largely based on the understanding that providers have of their cost structures, relative to urban services. In some cases this understanding could be readily substantiated (eg petrol prices, staff training costs), in other cases it was more difficult, and based on discussions rural and remote providers had had with other rural and urban providers.
Depending on remoteness, the additional operating costs are estimated by providers to be 10 - 20% higher than in urban areas (excluding lower productivity). Some providers indicated that costs were higher still, particularly in very remote areas.
Table 2.15 provides a summary basis for these estimates, and each expense category is discussed in more detail below. Note that the sample size and quality of data do not permit more detailed analysis of costs. A more comprehensive analysis would develop estimates for Moderately Accessible, Remote and Very Remote areas, as well as take into consideration the size and structure of services.
Table 2.15: Input costs of services in rural and remote locations compared to urban areas
| Expense item |
Relative cost compared to urban services
per consumer) (times) |
% of total operating costs of agency |
Level of input costs compared to urban agency |
| Travel costs |
1.5 -2.0 |
5 - 10% |
4 - 10% higher |
| Telecommunications costs |
1.5 |
3 - 8% |
2 - 4% higher |
| Rental |
-1.2 - +1.2 |
3 - 7% |
- |
| Salaries and wages |
1.05 - 1.10 |
45 - 55% |
2 - 4% higher |
| Staff training |
1.5 |
2 - 3% |
2 - 2% higher |
| Other |
varies |
20 - 40% |
not applicable |
| Total |
|
|
10 - 20% higher |
- Source: Thomson Goodall Associates, based on discussions with case study participants and others.
- Note: The total 10 - 20% higher is the sum of each of the expense items. However, cost proportions may be interdependent. For example a mobile outreach service may have higher travel costs, but less rent; higher communications costs may lead to lower travel costs.
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Travel costs (5-10% of total expenses)
Travel costs are generally higher in rural and remote locations due to:
- higher fuel prices;
- longer distances travelled (due to location of consumer, service provider, and employer);
- lack of public transport; and
- cost of overnight accommodation on some trips.
A few service providers consider that more vehicles per staff member are required in rural and remote services, leading to higher vehicle costs. Motor vehicle repairs and maintenance costs are higher.
Travel costs may represent 5% of total costs in rural areas, and 10% in more remote areas. Anecdotally, travel costs may be 50-100% higher per consumer compared to urban locations. One service provider noted:
'Organisations must be prepared to travel. In rural and remote communities, there is often no public transport, and many people with disabilities do not drive, their parent/ families/carers work or are not able to drive to services, or places of employment.'
Telecommunications costs (3-8% of total expenses)
Telephone, fax and email are generally higher due to higher call rates (ie STD), conference calls, and higher numbers of calls (as a substitute for travel, where possible). Some services with remote outlets have dedicated ISDN lines for communication and data transmission.
Rental (3-7% of total expenses)
Rents vary considerably in rural and remote communities, depending on economic circumstances, and available accommodation. In some depressed areas such as Burnie, rents are relatively low. In mining towns (such as Mount Isa) or towns with tourism such as Bega, rents can be quite high.
Salaries and wages (45-55% of total expenses)
Staff salaries and wages, including on-costs represent 45-55% of total expenses. The majority of service providers pay staff according to the SACS Award. Some services offer salaries and benefits at a (higher) level within this Award in order to attract competent and qualified staff to live and work in an isolated region. However no data is available. Some providers pay staff according to other awards (for example, local government awards) which offer less remuneration.
Staff training (2-3% of total expenses)
Staff training costs are relatively high due to travel and overnight accommodation costs, as well as backfill, if required. The requirement for staff training is increased due to higher staff turnover in rural and remote communities.
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Other costs
The costs of stationery, printing, supplies, and other services are generally higher in rural and remote locations due to transport and storage cost premiums.
Overall impact
While the data is not based on a detailed cost analysis, discussions with providers suggest that the overall cost of operating disability employment services in rural and remote locations could be 10-20% higher than urban locations (for a service of the same size, or number of employees).
Lower service productivity
In rural and remote locations, costs per consumer can also be higher as a result of lower caseloads compared to urban based services, combined with less capacity to achieve economies of scale and community support.
Lower caseloads are a consequence of lower staff productivity due to:
- time spent travelling
- provider estimates of time spent 'on the road' rangedfrom 12% for a town based service (town pop. of 25,000) with a remote outlet,to 30% for a service in a smaller remote town (population around 5,000), withno separate outlets;
- time spent providing additional training and support services such as arrangingtransport, assisting with paying bills and tax returns, shopping for food andclothing for consumers (ie in the absence of other community services);
- lower 'throughput' (ie employment outcomes) due to longer times required tofind employment in areas of high unemployment, and where labour marketsare seasonal; and
- higher staff turnover, involving recruitment, periods with staff shortages, andlower productivity of new staff.
The total effect may be that staff productivity (ie time spent to achieve outcomes) is 10-30% lower than urban services.
19 Productivity may be improved by developing innovative service models, which reduce the amount of time spent travelling, and enhance employment opportunities.
Economies of scale
Unit costs are generally higher in rural and remote communities because services are smaller, and there are fixed overheads associated with operating the service such as rental, motor vehicles and office equipment, etc. However, many existing providers in rural and remote communities are either outlets of larger organisations or part of a larger organisation (ie multi-program agency), and are thus able to achieve some economies, as administrative costs are spread across more than one outlet and/or program area.
Community support
The use of volunteers to reduce costs is not common among smaller remote disability employment services, unless they are part of a larger auspice organisation, or an organisation with a name well known to the community. Similarly, fundraising is not common (based on discussions with service providers participating in case studies). Larger urban services have the capacity to recruit volunteers and seek donations from a much larger population base, particularly those which are visible in the community.
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Combined effects of input costs and productivity
Combining the effects of higher input costs, and lower productivity across the ranges identified above, would indicate a net effective increase in cost per consumer, as shown in Table 2.16.
Table 2.16: Estimated net increase in unit cost
| Reduction in productivity (p) |
Increase in input cost (c) |
| 10% |
15% |
20% |
| 10% |
1.18 |
1.28 |
1.39 |
| 20% |
1.24 |
1.34 |
1.44 |
| 30% |
1.31 |
1.41 |
1.51 |
Source: Thomson Goodall Associates estimates, based on information collected during the course of the study. Estimates are calculated assuming the cost of providing direct services are 70% of total costs. Refer CSDA Evaluation, The Cost Study, Table 1.1. Estimates are based on the formula: net increase = (1+c)(1 + 0.7p).
Note that these are theoretical amounts, based on a range of values for input costs and productivity, based on a limited sample of organisations in rural and remote locations. Nevertheless they are broadly consistent with Grants Commission data (refer Tables 2.11 and 2.12).
It is clear that traditional service models in rural and remote locations are subject to higher costs, and this needs to be taken into account in case based funding (or allowed for as part of alternative funding systems). However there is no readily available formula which can be simply applied.
Ideally an approach is required which is simple and administratively workable, equitable, and which promotes efficient and effective provision of disability employment assistance.
The Grants Commission data provides a potential basis for establishing additional input costs in a case based funding system. However it does not address productivity. Productivity considerations are matters for policy makers and service providers. Such decisions about how to provide services are determined locally, depending on local circumstances.
Lower productivity in this situation relates to accessibility of services, which suggests that ARIA measures could be used to determine additional resources required if additional costs cannot be offset by other (innovative) measures to increase accessibility and productivity. This is discussed further in Section 3.
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2.4 Labour market conditions in rural and remote areas
2.4.1 Unemployment
There are regional disparities in economic conditions, and hence employment, with generally higher levels of unemployment in rural and remote areas compared to urban areas. However this varies according to local circumstances.
Regional disparities in employment may be due to a wide range of factors. In resource based regions such as the Pilbara, Mount Isa and Broken Hill economic conditions are influenced by world prices as well as the stock of natural resources. Rural or agricultural regions are affected by commodity prices, which have been decreasing in real terms. In lifestyle/tourism regions economic circumstances are affected by tourism. Some rural manufacturing industries, formerly based on agricultural products (textiles, clothing, timber, foodstuffs) have suffered due to the progressive removal of tariff protection (examples include Burnie, and Port Pirie).
21 Some rural and remote locations have low unemployment due to one or two major local organisations developing or enjoying high levels of production. For example Mount Isa (Qld) and Nhill (Vic) have relatively low levels of unemployment. In many of the case study areas unemployment rates were higher than the Australian average.
Not surprisingly, regions with high unemployment tend to experience lower employment growth rates and consequently job seekers often encounter greater competition for available vacancies (including entry level positions and, in some cases, places in Work for the Dole schemes). People with disabilities in regions with high unemployment may also encounter greater competition for both higher skilled and low paid, labour intensive positions. Nevertheless, unemployment rates in isolation should not be interpreted simplistically as an indication of labour market disadvantage. For instance, a region with a high unemployment rate may actually be experiencing strong employment growth, with job seekers facing far less competition for available jobs due to the dynamic nature of the labour market.
2.4.2 Seasonal work
Work opportunities are often seasonal in rural and remote communities due to seasonal farming cycles. There is usually a high influx of itinerant professional workers during planting, harvesting and other key times. Opportunities for people with disabilities also increase at these times. Seasonal jobs are generally a few months in duration, and seasonal workers often require replacement jobs which may require re-training.
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2.4.3 Industrial reform
Industrial reforms have reduced employment opportunities in many rural and remote communities in recent decades. Not only has this led to higher unemployment, but also the structure of work has changed. Mechanisation has continued to reduce opportunities for labour intensive work (for example fruit and vegetable harvesting, grape picking). Processing industries (textiles, food and other manufacturing) have restructured. More mines are now operating on a fly in/fly out basis, reducing the economic activity of the local community, and job opportunities for people (for example, Strahan).
The development of information technology in many industries provides opportunities for work outside urban centres, or away from the factory floor.
2.4.4 Barriers for people with disabilities
Some industries are reluctant to employ people with disabilities for occupational health and safety reasons (eg in mining and mineral processing where the work environment is considered more dangerous). The location of a prospective work site may be remote and difficult to access for people with disabilities. Employment prospects may also be limited by conservative attitudes and prejudices within the local community towards people with a disability. This may occur in rural and remote areas.
The Disability Discrimination Act prohibits employers from discriminating on the basis of disability. Employment decisions are to be made on the basis of the 'best person for the job'.
Government funded organisations are often major employers in rural and remote communities. However there are no government programs which actively promote employment of people with disability.
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2.5 Business services in rural and remote communities
FaCS funded business services in rural and remote communities also experience higher input costs. However, cost structures are different to open employment services, and as most services are 'centre based' they do not experience lower productivity due to travel. Specific business service issues include:
23
- the markets for products and services tend to be local, due to the high cost of transport to population centres. This limits the capacity for volume production. Markets can also be seasonal/variable when related to local conditions - primary production, work gangs for maintenance, nursery production, or tourism;
- business services in rural and remote locations are labour intensive rather than capital intensive with a higher proportion of total costs comprising salaries and wages. Urban based business services are more likely to be involved in packaging and assembly operations, and rural and remote involved in laundry, production of artwork, food, sewing and plant nurseries;
- due to the smaller size of business services in rural and remote communities there are limited opportunities to achieve economies of scale and a more capital intensive operation;
- business services may be the only disability service in the community, and are often expected to provide a range of support needs outside employment. They may effectively provide day options and respite. They may also provide other support services which are not available in the local community, including training, recreation, health and transport services;
- the business service may be regarded by the local community as a welfare organisation rather than a business, deserving of charitable support, rather than commercial support. This may also apply to some urban services; and
- rural and remote business services may find it more difficult to attract and retain managers, board members, and staff with requisite knowledge and skills.
The Business Services Review found that the location of business services does not appear to significantly influence the performance and efficiency of business services. However, the Business Services Review
24 did not consider the issue of location of business services in detail, and conclusions were based on a relatively small sample of business services operating in rural and remote locations. There were 2 services in Very Remote, 5 services in Remote and 11 services in Moderately Accessible areas, out of a total of 344 services.
The use of ARIA classifications to 'locate' business services was also misleading. ARIA is intended to measure access by individuals to community services, and not as a proxy for locational disadvantage for businesses. Using ARIA to identify regional variations in business performance is inappropriate. For example, a business service operating in a town of 5,000 people hundreds of kilometres from major markets would be considered Highly Accessible.
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2.6 Conclusions
The case study approach adopted for this study does not permit the development of a cost model for disability employment services. It does however allow a reasonably comprehensive exploration of the cost issues associated with providing services in rural and remote locations. A number of conclusions can be drawn, which need to be taken into consideration in developing innovative models to ensuring better delivery of employment assistance in rural and remote locations. These are:
- the ARIA classification provides a number which is a measure of remoteness. Based on ARIA classifications, in rural and remote areas, 8.5% of total disability employment services assist 5.7% of total consumers, and 7% of people with severe and profound disability live in these areas. While there appears to be higher unmet demand in rural and remote areas, data is inconclusive, as some job seekers with disabilities travel and relocate from more remote to less remote areas, in order to access a range of services and improve prospects for employment;
- a higher number of services (possibly 10-15% of services) experience remoteness by providing services to rural and remote locations from a more 'Accessible' location;
- analysis of various data including disability employment assistance data suggests coverage is more limited in rural and remote locations. However further analysis is required applying Census data to an expanded ARIA scale. If unmet demand is relatively higher in rural and remote locations, then additional resources are required in rural and remote locations in order to improve funding equity;
- case study data, supported by Grants Commission information indicate that input costs for disability employment services in rural and remote locations are 10-20% higher than in urban areas, mainly due to higher travel and communications costs. Salaries and wages may also be slightly higher. Grants Commission information suggests even higher relative costs in very remote locations;
- staff productivity in open employment services in rural and remote locations is reportedly lower due to a number of factors, particularly longer travel times. In addition, a lower 'throughput' of job seekers with disabilities may occur in those regions with low or inconsistent employment growth; and
- business services in rural and remote locations experience higher input costs, and have different issues than those in urban areas, in terms of access to markets, size, management knowledge and skill base, links with day care and status in the local community.
Recommendations:
- 2.1 It is recommended that FaCS seek to establish a system for collecting improved data and information on unmet demand for disability employment assistance, including improved categorisation of rural and remote locations, with a view to improving service coverage in rural and remote locations.
- 2.2 It is recommended that FaCS seeks the assistance of the Commonwealth Grants Commission to establish cost indices for selected rural and remote locations, where disability employment assistance is provided.
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