Background

In July 2020, Australian governments and First Nations communities committed to working together in partnership under the National Agreement on Closing the Gap (‘the National Agreement’).

Under the National Agreement, the Victorian Government is required to ‘review and identify current spending on Aboriginal and Torres Strait Islander programs and services’.

To meet its commitment, the Victorian Department of Premier and Cabinet is seeking to report on two types of Victorian Government spending.

1. Targeted expenditure: Expenditure on programs or services that are specifically designed to support First Nations communities (for example, expenditure on First Peoples community housing).
2. Non-targeted expenditure: First Peoples’ share of expenditure on programs or services that are relevant to all Victorians (for example, expenditure on the hospital system, school system and other general government services).

This is the first time this exercise has been undertaken.

The Expenditure Review will provide policy makers with financial and non-financial data to inform future resource allocation.

Scope of this report

This report presents the estimated targeted expenditure in Victoria relating to First Peoples.

Language

Inside Policy and Taylor Fry recognise the diversity of Aboriginal and Torres Strait Islander people living in Victoria. Throughout this document, we use the term ‘First Peoples’ and ‘Aboriginal’ to include all people of Aboriginal and Torres Strait Islander descent living in Victoria.

Methodology

Departments and agencies were asked to identify and isolate expenditure related to First Peoples-specific programs and services.

‘Expenditure’ refers to expenses from transactions, excluding capital, in the general government sector.

‘First Peoples-specific expenditure’ is defined as that which relates exclusively or predominantly to First Peoples. In this report we also refer to this expenditure as ‘targeted expenditure’. For example:

• A discrete grants program eligible to only Aboriginal organisations
• A business support service that targets First People in Victoria only.

FY22/23 is selected as the focus year for this report. This year provides recent data, and was found to be reliable in comparison to prior year expenditure. FY23/24 appeared less reliable, noting the State Budget was in the process of being finalised when data was collected.

Machinery of government changes took place during the period considered in this report. We have spoken with departments to confirm the risk of error or duplication is low for the significant change to the Department of Health and Human Services in 2020-21. We do not expect the impact of other machinery of government changes to be significant, however we will be seeking further confirmation of this from departments.

Data requests

Targeted expenditure was requested for the following years:

• FY19/20 (actual)
• FY20/21 (actual)
• FY21/22 (actual)
• FY22/23 (forecast)
• FY23/24 (budgeted)

The data request sought information on targeted First Peoples spend for each program within each department categorised by:

• Service Provider
• The relevant Closing the Gap and the Victorian Aboriginal Affairs Framework targets and goals
• Expense category (i.e. funding approach)
• Existence and type of evaluation of the program
• Region.

Data reliance

We have relied on the accuracy and completeness of the data submissions from each department and agency. If departments or agencies become aware of errors in their submission, we should be notified of those errors to enable corrections to this report.

We have performed some checks for reasonableness on the data supplied by departments. Our checks included:

• Duplication - review for duplication within submissions, e.g. due to machinery of government restructuring.
• Expenditure validation – identifying and querying any unusual or unexpected trends in expenditure. For example, we compared forecast FY22/23 against prior year actual expenditure.
• Review of targeted nature of program – using publicly available information we reviewed large programs to verify their classification as First Peoples-specific expenditure.

Data quality

First Peoples-specific expenditure data has not historically been collected and reported centrally within Victorian Government, and therefore no consistent reporting frameworks have been established. During this exercise, it was not unusual for departments to report that collecting the data for the first time was difficult, requiring input from a range of stakeholders.

Therefore, it is likely that the data will include some level of inaccuracy. This would be consistent with the experience in other jurisdictions that have reported on First Peoples-specific expenditure.

Missing data

The Department of Government Services was excluded from this report as it was formed on 1 January 2023 and did not have a full financial year of data to report on.

Overview of expenditure

For FY22/23, the forecast First Peoples-specific expenditure is $747 million.

The four largest departments by total expenditure in FY22/23 are:

• Families, Fairness and Housing
• Health
• Justice and Community Safety
• Energy, Environment and Climate Action

For other departments total expenditure is $148M, including:

• Premier and Cabinet $59M
• Education $47M
• Jobs, Skills, Industry and Regions $24M
• Court Services Victoria $11M.

Expenditure over time

Targeted expenditure has increased year on year.

• Targeted expenditure grew from $423M in FY19/20 to $747M in FY22/23.
• The growth in targeted expenditure reflects a combination of:
  • Growth in total expenditure on services provided to First Peoples.
  • A reallocation of expenditure from non-targeted to targeted services. For example, Aboriginal children in the child protection system are increasingly being supported through targeted services, whereas in FY19/20 they were supported through non-targeted services.
• Phase 2 will explore how much of the growth relates to growth in total expenditure vs a reallocation from non-targeted services.
• Analysing the data by financial year:
  • Expenditure grew by 41% between FY19/20 and FY20/21. The high rate of growth was driven by relatively large increases in expenditure identified by the Department of Families, Fairness and Housing, the Department of Justice and Community Safety, and the Department of Energy, Environment and Climate Action, as well as some COVID-19 spending measures (see next slide).
  • Expenditure grew by 11% and 13% in subsequent years.

Expenditure growth by departments

Since FY19/20, expenditure has grown across all departments.

• The chart shows that the largest areas of growth between FY19/20 and FY22/23 were:
  • Families, Fairness and Housing – expenditure grew from $148M to $256M (+$107M)
  • Health – expenditure grew from $103M to $139M (+$33M)
  • Justice and Community Safety – expenditure grew from $46M to $125M (+$79M)
  • Energy, Environment and Climate Action – expenditure grew from $19M to $78M (+$59M).
• A one-off COVID-19 related $18.5M program caused a spike in Jobs, Skills, Industry and Regions expenditure in FY20/21.

Service delivery

The departments were asked to specify the delivery mechanism for each program: Aboriginal Community Controlled Organisations (‘ACCOs’), Victorian Government, First Peoples business, local councils, NGOs, for-profit business (excluding First Peoples business) and other.

The data shows that:

• Over half of targeted expenditure is delivered through ACCOs
• Victorian Government delivers a high proportion of targeted services directly.

One limitation of the data is that it did not separately identify expenditure for Traditional Owner Corporations (TOCs). Departments in some cases classified these organisations as ACCOs, and in other cases classified them as ‘Other organisations and statutory Aboriginal representative bodies’. We recommend that Traditional Owner Corporations are included as a separate category in any future reporting.

Along with TOCs, the ‘Other organisations and statutory Aboriginal representative bodies’ category includes funding for universities, hospitals, local councils, businesses (other than First Peoples businesses) and other organisations.

Service delivery trends over time

ACCOs are responsible for delivering more than half of the targeted expenditure over the period under review:

• Their share of service delivery is between 53% and 58% in all years
• Expenditure grew from $231M in FY19/20 to $407M in FY22/23 (+$176M)

The proportions of expenditure for each delivery mechanism are relatively stable over time. This suggests that total expenditure growth has been evenly distributed between ACCOs, Victorian Government, NGOs and other providers.

Program evaluations

Program evaluations support an understanding of the effectiveness of government investment and its impact on First Peoples in Victoria. The departments were asked to specify whether programs have undergone evaluation and if so, the type of evaluation.

53% of expenditure was on programs that have been evaluated. This excludes some programs that are unlikely to be eligible for evaluation, e.g. newly established programs and First Peoples-specific workforces in government.

47% of expenditure was on programs that have not been evaluated. Larger contributors to this include:

• Health. The department noted complexity in attributing performance to individual programs, as well as difficulties running evaluations during the pandemic. It also noted it has other monitoring and reporting arrangements that are used to foster accountability, and that its Aboriginal Health Division is leading reforms to outcomes-based funding and reporting that are expected to lay a foundation for future evaluation.
• Families, Fairness and Housing. While most programs have been evaluated, several larger ones had not as of FY22/23. Evaluations are planned in FY23/24 to cover a number of the larger program areas. Additionally, the department noted that there are other monitoring arrangements that support accountability, and that it is pursuing funding reforms with a greater focus on outcomes.

Funding approach

The funding approach was provided for $719M (96%) of the total $747M in expenditure. Types of funding included:

• Contract/service agreement
• Direct service delivery (including salaries)
• Grant expenditure
• Reimbursement/Compensation
• Aboriginal-identified employment
• Other.

$524M (70%) of funding is delivered through contracts, service agreements and grants of which $297M (40%) is delivered through contracts and service agreements.

Expenditure by Closing the Gap target

Departments were asked to allocate expenditure to the 19 Closing the Gap targets.* Where programs supported multiple targets, departments chose the target that best aligns with the program’s objectives.

There is significant variance in the size of expenditure by different Closing the Gap targets. Targets that align with Health, and Families, Fairness and Housing have higher expenditure. For example, expenditure is highest for Life expectancy (Health) and Out-of-home care (Families, Fairness and Housing).

$606M (81%) of the $747M targeted expenditure was attributed to a Closing the Gap target.

$142M (19%) is not allocated to a target, including:

• $43M that supports Closing the Gap Priority Reforms
• Internal operating costs for Premier and Cabinet and Energy, Environment and Climate Action
• Funding for the Korin Korin Balit-Djak system transformation (Families, Fairness and Housing)
• Stolen Generations Reparations Payments (Justice and Community Safety).

* Note that costs have been allocated to Closing the Gap targets but not to the Closing the Gap outcomes.

Detailed breakdown – expenditure above $20M (1/2)

For Closing the Gap targets with more than $20M of expenditure in FY22/23:

• The targets with the highest expenditure are for out-of-home care, life expectancy, and family violence. In total these make up $358M of the $747M (48%).
• Life expectancy ($140M) expenditure included the following large programs:
  • Aboriginal cultural safety grant - hospital activity ($30M)
  • ACCO services – primary health ($25M).
• Out-of-home care ($140M) is primarily delivered through ACCOs. Large individual projects contributing to this total include:
  • Intensive Family Services and Preservation and Reunification Response ($29M)
  • Cultural plans, Aboriginal Family Led Decision Making and Aboriginal Children in Aboriginal Care ($25M).

Detailed breakdown –expenditure above $20M (2/2)

For Closing the Gap targets with more than $20M of expenditure in FY22/23:

• Growth in expenditure by target reflects the growth in targeted expenditure by departments. Targets related to Families, Fairness and Housing have grown by relatively large amounts:
  • Out-of-home care targeted expenditure increased from $87M in FY19/20 to $140M in FY22/23 (+$52M).
  • Family violence targeted expenditure increased from $36M in FY19/20 to $79M in FY22/23 (+$43M).
• Expenditure relating to the life expectancy target grew from $102M in FY19/20 to $140M in FY22/23 (+$38M).

For Closing the Gap targets with less than $20M of expenditure in FY22/23:

• Two had expenditure less than $1M:
  • Target 17 – digital inclusion
  • Target 15b – sea rights.

For Closing the Gap targets with less than $20M of expenditure in FY22/23:

• As expected, given the overall growth in expenditure, many targets show a similar growth trend.
• Targets with little or no growth include:
  • Tertiary qualifications
  • Year 12 qualifications
  • Suicide.

The National Agreement on Closing the Gap is underpinned by four Priority Reforms. Where possible, FY22/23 expenditure was allocated to the Priority Reforms as follows:

• $189M for PR-1 Formal partnerships and shared decision-making
• $209M for PR-2 Building the community-controlled sector
• $37M for PR-3 Transforming government organisations
• $2M for PR-4 Shared access to data and information at a regional level.

$311M of $747M (42%) of expenditure could not be allocated to a Priority Reform. Included is expenditure that was ‘Not applicable’ ($289M) and where Priority Reform information was missing ($22M).

• This includes $139M from Health, who advised ‘…priority reforms are akin to system-wide levers. As such, all Aboriginal Health programs consider and address these, but are not solely targeted at one priority reform.’

Victorian Aboriginal Affairs Framework goals

The Victorian Aboriginal Affairs Framework 2018-2023 (VAAF) is the Victorian Government’s overarching framework for working with Aboriginal Victorians, organisations and the wider community to drive action and improve outcomes.

$695M of the $747M (93%) of targeted expenditure was attributed to a VAAF goal.

Goals with the highest targeted expenditure are:

• Goal 17 - Aboriginal Victorians feel safe and connected ($221M)
• Goal 18 - Aboriginal land, water and cultural rights are realised ($101M).

Goals with expenditure less than $2M include:

• Goal 10 - Aboriginal income potential is realised ($1.1M)
• Goal 20 - Racism is eliminated ($0.2M).

Future improvements to data quality

During the project we identified a number of potential enhancements to the data collected. These include:

• Additional areas for reporting – An initial data collection template was developed in conjunction with DPC for this project. More detailed options could be added in some areas. Key examples include: reporting separately on funding for Traditional Owner Corporations, more detailed reporting on evaluations (such as whether First Peoples were involved in the evaluation, and whether it was combined with an evaluation of non-targeted services) and allowing departments to specify more than one Closing the Gap Target or Priority Reform for each program reported in the data.
• Data by geographic region – most departments reported that expenditure was unable to be allocated to Local Government Areas. This was partly the result of gaps in data, and partly due to differences in geographic regions used in reporting across departments. With some effort it may be possible to fill data gaps and develop a consistent approach for reporting.
• Guidance materials and templates – Guidance materials and templates could be enhanced to cover frequently asked questions.
• Budgeted expenditure – Departments had difficulty reporting accurately on FY23/24 budgeted expenditure given the timing of the review. If reviews are to be undertaken annually, data requests could be timed after budgets are set.

With regular and increased focus on reporting of First Peoples-specific expenditure, it is likely that the accuracy, availability and depth of data will improve over time.

These are the views of Inside Policy and Taylor Fry alone and should not be taken as the position of the Victorian Government.

Overview

This section presents more detailed results for each department contributing to the report.

The results include expenditure from the departments themselves.

The results separate the expenditure of Victoria Police and Court Services Victoria as they report their data separately to the Department of Justice and Community Safety.

Machinery of government changes took place during the period considered in this report. The most significant of these was the division of the Department of Health and Human Services into the Department of Health and Department of Families, Fairness and Housing in 2020-21. The results reported reflect the current 2022-23 Victorian Government structure – for example, the data shows what total expenditure for the Department of Health would have been if it had been a separate department in 2020-21.

Department of Families, Fairness and Housing

Department of Families, Fairness and Housing expenditure increased from $148M in FY19/20 to $256M in FY22/23 (+107M).

• Growth in expenditure is high across all years, particularly between FY19/20 and FY20/21.
• There is high growth in targeted expenditure across a range of programs, including Family and Community Services, Family Violence Responses and The Orange Door.
• Almost all of the department’s targeted expenditure is delivered through ACCOs.

Department of Health

Department of Health expenditure increased from $103M in FY19/20 to $141M in FY22/23 (+38M).

• Growth in expenditure is high across a range of programs. Examples include Primary Care, Mental Health and Drug Services provided through ACCOs, and Aboriginal Maternal and Child Health.
• Most of the department’s targeted expenditure is provided by ACCOs ($91M). Of the $38M provided by an ‘Other organisations and statutory Aboriginal representative bodies’ service provider, the vast majority relates to funding for hospitals under the Aboriginal Cultural Safety Grant program.

Department of Justice and Community Safety

Department of Justice and Community Safety spend grew from $46M in FY19/20 to $125M in FY22/23 (+$79M).

• Targeted expenditure for the Department of Justice and Community Safety does not include data from Court Services Victoria or Victoria Police which are presented separately.
• Land Justice expenditure is included here due to being included under the Department of Justice and Community Safety for most of the period considered. It is now part of the Department of Premier and Cabinet.
• There is high growth in expenditure from FY19/20 to FY20/21 and FY21/22 to FY22/23. Contributing significantly to the increase in expenditure is the implementation of Stolen Generations Reparations Payments, which had applications opened in March 2022, with $36M of expenditure in FY22/23, compared to $0.5M in FY21/22.

Department of Energy, Environment and Climate Action

Department of Energy, Environment and Climate Action expenditure increased from $19M in FY19/20 to $78M in FY22/23 (+59M).

• The Department of Energy, Environment and Climate Action has the fastest growing targeted expenditure of all departments (60% p.a.). The rapid growth in expenditure was driven by the launch of the Pupangarli Marnmarnepu ‘Owning our Future’ – Aboriginal Self-Determination Reform Strategy in August 2020.
• Just over half of the department’s targeted expenditure is delivered by the Victorian Government. ‘Other organisations and statutory Aboriginal representative bodies’ services are mostly delivered through Traditional Owner Corporations.

Department of Premier and Cabinet

Department of Premier and Cabinet expenditure increased from $52M in FY19/20 to $59M in FY22/23 (+8M).

• Expenditure has increased over the four years considered. This has been driven by First Peoples – State Relations Group (FPSR) operating costs, noting that FPSR are responsible for driving and delivering a large majority of the department’s targeted expenditure.
• Just over half of the department’s targeted expenditure is delivered by the Victorian Government, primarily due to expenditure on FPSR operating costs. Key components of expenditure delivered by ‘Other organisations and statutory Aboriginal representative bodies’ include funding for First Peoples’ Assembly of Victoria and the Registered Aboriginal Party Operations Program.

Department of Education

Department of Education expenditure increased from $38M in FY19/20 to $47M in FY22/23 (+10M).

• Expenditure has grown at 8% per year on average.
• Some key drivers of growth include increased expenditure in the Koorie Education Workforce and Balert Gerrbik - Koorie Families as First Educators programs. These are provided by the Victorian Government and ACCOs respectively.
• Just over half of the department’s targeted expenditure is delivered by the Victorian Government. The remainder is mostly delivered through ACCOs and other NGOs.

Department of Jobs, Skills, Industry and Regions

Department of Jobs, Skills, Industry and Regions expenditure increased from $9M in FY19/20 to $24M in FY22/23 (+15M).

• Jobs, Skills, Industry and Regions expenditure peaked in FY20/21, coinciding with $18.5M funding for the Working for Victoria initiative. This initiative supported Aboriginal Victorians who had lost their jobs including as a result of COVID-19.
• Targeted expenditure has grown at an average 40% p.a., noting there has been variability observed across years.
• Most of the department’s targeted expenditure is delivered through ‘Other’ service providers. ‘Other organisations and statutory Aboriginal representative bodies’ service provides include Traditional Owner Corporations and other bodies such as universities.

Court Services Victoria

Court Services Victoria spend grew from $7M in FY19/20 to $11M in FY22/23 (+$4M).

• Growth in expenditure is due to both to new programs being added in later years and an increase in expenditure across individual programs.
• Most of the expenditure is delivered through the Victorian Government, with only one item delivered through Other organisations and statutory Aboriginal representative bodies.

Victoria Police

Victoria Police spend grew from $2M in FY19/20 to $4M in FY22/23 (+$2M).

• Growth in expenditure is due to an increase in spend across programs and the addition of several new programs across the reporting period.
• A significant amount of the growth is due to the implementation of the Police Aboriginal Liaison Officer Program in FY20/21, which grew from $0.4M in FY20/21 to $1.1M in FY22/23.
• All Victoria Police expenditure is delivered by the Victorian Government.

Department of Transport and Planning

Department of Transport and Planning expenditure grew from $0.3M reported expenditure in FY20/21 to $2M in FY22/23.

• Growth in expenditure for FY22/23 is driven by expenditure on the Aboriginal Self-Determination Plan.
• In addition to the amounts reported, the Department of Transport and Planning noted that the Victorian Government established the Major Transport Infrastructure Authority to deliver key transport infrastructure programs. These projects have Aboriginal Employment Hours targets.
• Most of the department’s targeted expenditure is delivered by the Victorian Government.

Department of Treasury and Finance

Department of Treasury and Finance contributed approximately $0.3M in expenditure from FY19/20 to FY22/23.

• There was only one item of targeted expenditure (Aboriginal Affairs) within the Department of Treasury and Finance, delivered by the Victorian Government.

Definitions (1/2)

Expenditure and First Peoples-specific programs

Departments and agencies are asked to identify and isolate expenditures related to their First Peoples-specific programs and services.

‘Expenditure’ refers to expenses from transactions (excluding capital) in the general government sector.

‘First People-specific expenditure’ is defined as that which relates exclusively to, or will predominately benefit, Aboriginal and Torres Strait Islander peoples or communities that can be directly attributed to a program, service or initiative. Examples of First People-specific programs include:

• A discrete grants program eligible to Aboriginal organisations only
• A business support service that targets First Peoples in Victoria only.

Program Name, Purpose and Description

This information is intended to provide an understanding of the breadth and diversity of First Peoples-specific programs and services being supported by the Victorian Government, and detail on the outcomes that the initiative aims to achieve.

Program Evaluations

The information on program evaluations will support an understanding of the effectiveness of government investment, and its social impact on First Peoples in Victoria. The data request seeks information on the program evaluations that have taken place which can be in the following forms:

• Outcome evaluation – measures the extent of change and examines to what degree the initiative has contributed to the observed changes. Outcomes may be realised in the short, intermediate and/or longer term. They may include changes in people’s lives, conditions, knowledge, attitudes, values, behaviours, status, and/or satisfaction levels. Outcomes can include benefits (increases in social wellbeing following from outcomes).
• Process evaluation – examines initiative implementation and delivery. It focuses on the inputs, activities and outputs of an initiative. Process evaluations examine the contexts in which the initiative is operating, identify issues with delivery, review the appropriateness and efficiency of the initiative, and provide information for process improvements.
• Economic evaluation/cost benefit analysis (CBA) – identifies and measures the consequences of an initiative in relation to its costs. CBA is a comprehensive presentation of all the impacts of an initiative (economic, social, cultural, environmental), and assesses whether the investment was worthwhile.

Definitions (2/2)

Service provider definitions

• Aboriginal Community Controlled Organisation (ACCO) – as defined by the National Agreement on Closing the Gap, an ACCO delivers services, including land and resource management, which builds the strength and empowerment of First Peoples and is:
  • Incorporated under relevant legislation and not-for-profit;
  • Controlled and operated by First Peoples;
  • Connected to the community, or communities, in which they deliver the services; and
  • Governed by a majority First Peoples governing body.
• First Peoples businesses – a First Peoples business is one that has at least 50% First Peoples ownership, that is recognised through an appropriate organisation (such as Supply Nation).
• Local councils – this applies when local councils in Victoria are directly responsible for service delivery.
• Non-government organisation – a non-profit organisation that operates independently of government, typically one whose purpose is to address a social or political issue. For the purpose of this exercise, ACCOs are not classified as NGOs.
• For-profit business – this applies when a for-profit business that operates independently of government is responsible for service delivery (this includes sub-contractors).
• Victorian Government – this applies when the Victorian Government is directly responsible for the service delivery. This includes teams internal to agencies that are responsible for administering and delivering government services.

Expenditure by Closing the Gap target – targets above $20M

Departments were asked to allocate expenditure to the 19 targets in the National Agreement on Closing the Gap. Where programs supported multiple targets, departments chose the target that best aligns with the program’s objectives.

The out-of-home care, life expectancy and family violence targets were predominately delivered through ACCOs.

For targets with a large ‘all other service providers’ expenditure:

• The life expectancy target has $38M delivered by other organisations and statutory Aboriginal representative bodies, along with $5M delivered through NGOs
• The land rights target has $32M delivered through other organisations and statutory Aboriginal representative bodies.

Expenditure by Closing the Gap target – targets below $20M

The overcrowding, early childhood education, water entitlement and healthy birthweight targets were predominately delivered through ACCOs.

For the tertiary qualification target (with a large ‘all other service providers’ expenditure) – this expenditure was delivered through NGOs.