Cost-benefit analysis
In 2006, Morgan Disney and Associates undertook a study to inform the Community, and Disability Services Ministers’ Conference (CDSMC) (and governments) about the current alternate pathways of young people after they leave formal care, and the comparative cost of these pathways to governments.
The intention of identifying the alternative pathways and their costs was to establish the extent of potential cost savings if a proportion of young people were successfully diverted, through better support at the point of transition, to lower usage service pathways and to pathways which are economically and socially more productive.
The total (gross) estimated cost to government for a cohort of 1150 people who had left the formal child protection care system, across their life course from ages 16-60, is over $2 billion. This is equivalent to a cost of approximately $46 million for 1150 persons per annum, and an average cost of $40,000 per person per annum. An extract from the Morgan Disney and Associates report is at Attachment B.
Using the Morgan Disney and Associates pathways approach, we know that around 45 percent of young people who transition to independence have similar service usage costs to those of the broader population. These young people are likely to fit within Stein’s moving on category. However, this same approach indicates that 55 percent of young people who transition to independence are in pathways which are high cost across their life course – between $1 million and $2.2 million on average from age 16 up to 60.
Research undertaken by Raman, Inder and Forbes (2005) estimated and compared lifetime costs per person from the leaving care population and from the general population in Victoria. The analysis included eight cost areas of state government support: justice and corrective services, housing, health, GST revenue and child protection (reflecting the intergenerational cycle of care). The analysis shows that the Victorian Government spends $738,741 more on each care leaver compared to a non-care leaver over an adult lifetime. It is noted that this significant estimate does not include the substantially higher outlays incurred by the Commonwealth Government such as income support payments and health care.
The cost-benefit analyses of investing in the 15 to 25 year age group points to a need to provide appropriate, accessible support for care leavers to achieve social and economic participation which, over time, will facilitate a positive return to the community on this investment. Some jurisdictions already have legislation or policy in place to provide support for young people after they have left care, on an ‘as needed’ basis. This was discussed by McDowall (2009) and is summarised in Table 1.
The target group for the Transitioning to Independence national priority project includes all young people transitioning from out of home care. While the needs of young people whose characteristics are consistent with those of the ‘survivors’ or ‘strugglers’ and whose levels of service usage are within the moderate to high cost service usage categories are a focus of this project, the importance of ensuring that programs are universal, and available when required to all young people leaving out of home care is the primary focus.
Table 1: Legislative and Policy Requirements for Post Care Support (2009)
* A range of services and support is available on an ‘as needed’ basis
| State/Territory | Legislation or policy | Duration of support* |
|---|---|---|
| Northern Territory | Legislation | Planning to begin: 15 years Support provided: Up to 25 years* |
| Victoria | Legislation | Planning to begin: Above the age of 15 years and at least 12 months prior to young person exiting care Support provided: up to 21 years* |
| Western Australia | Legislation | Planning to begin: at any time after the person reaches 15 years of age Support provided: Up to 25 years* |
| New South Wales | Legislation | Planning to begin: At or above the age of 15 years and at least 12 months prior to a young person exiting care. (2 years in the case of young people with disability.) Support provided: Up to 25 years (or after at the discretion of the Minister under exceptional circumstances)*. |
| South Australia | Policy | Planning to begin: At age 15 years Support provided: Up to age 25 years under the Transitioning from Care Policy or through the Post Care Service for which there is no specified age limit.* |
| Tasmania | Policy | Planning to begin: At age 15 years Support provided: for one year following discharge from care, but may be up to three years (or age 21 years). Financial support can be provided from age 19 years through referral to the After Care Support Program and continue up to the age of 25 years* |
| Queensland | Policy | Planning to begin: one month prior to young person’s 15th birthday Support until: 18 years, and if support is considered necessary for the young person after the age of 18 years, a Special Services Case must be opened. There is no upper limit to the duration of support stated, either in legislation or policy however the expectation articulated in the policy is that the duration of a Special Services Case intervention generally should not exceed 12 months* |
| Australian Capital Territory | Policy | Planning to begin: Leaving care plans are to cover a 5 year span, including the years that the young person is still in care. Planning should commence no later than 16.5 years Support until: Up to 21.5 years, depending on age at which planning commences* |