7.2 Methodology of programme projections

To facilitate a comprehensive discussion at the programme level and to help guide the Commission’s work when formulating recommendations the Commission has published projections of expenditure for the large and fast growing programmes.

These projections are based on an accrual framework.

The projections up to and including 2016-17 are the programme level expenses as per the 2013-14 MYEFO.

Beyond 2016-17, programme-specific models have been used to project expenditure. These models are based on those used for the forward estimates, with modifications to incorporate drivers of programme growth over the longer term.

The drivers of growth in the longer term include demographic factors and specific government decisions that provide an extended funding profile beyond the forward estimates, for example the National Disability Insurance Scheme.

The projections of programme expenses rely on assumptions regarding economic and demographic factors, programme payment recipients, behaviour and other factors that drive estimates. Whilst the projections make use of the most appropriate assumptions, a high level of uncertainty is inherent in this form of modelling.

Hospitals

Hospital expense projections reflect the Commonwealth contribution to public hospital funding under the Commonwealth/State National Health Reform Agreement. Projections exclude public hospital spending on veterans.

Pharmaceutical Benefits Scheme

Pharmaceutical Benefits Scheme (PBS) projections reflect PBS expenditure under the National Health Act 1953. The Repatriation Pharmaceutical Benefits Scheme, which is a separate scheme funded through the Department of Veterans’ Affairs, has not been included.

Medicare Benefits Schedule

Medicare Benefits Schedule projections reflect Medicare Benefits Schedule expenditure under the Health Insurance Act 1973.

National Disability Insurance Scheme

National Disability Insurance Scheme projections reflect the Commonwealth’s contribution to the scheme, net of National Disability Specific Purpose Payment and existing Commonwealth programmes that provide disability care and support services.

Income Support for Carers

Income support for carers projections reflect the five major areas of support: Carer Payment (the main income support payment); Carer Allowance (Adult); Carer Allowance (Child); Carer Supplement; and Child Disability Assistance. Only the special appropriations have been modelled.

Child Care Fee Assistance

Child Care Fee Assistance projections reflect the Child Care Benefit and the Child Care Rebate.

Paid Parental Leave

Expenditure in 2013-14 and 2014-15 relates to the scheme as at the 2013-14 MYEFO. The remaining years relate to the Government’s proposed new scheme.

Disability Support Pension

Disability Support Pension (DSP) projections reflect the special appropriations for DSP.

Age Pension

Age pension projections reflect the special appropriations for Age Pension (including the pension supplement). The Wife Pension and Widow B Pension have not been included.

Aged Care and Population Ageing

Aged Care and Population Ageing projections reflect special appropriations for the Home Support, Home Care, Residential and Flexible Care programmes. The Department of Veterans’ Affairs component of the Residential Care programme is also included.

Family Tax Benefit

Family Tax Benefit projections reflect the special appropriations for Family Tax Benefit Part A and Part B.

Schools Funding

Schools funding projections reflect funding for both non-government and government schools, and include funding the Students First – a fairer funding agreement for schools package. For the purpose of producing these projections it has been assumed that the former Government’s Better Schools Plan is implemented in full, and that funding provided to non-participant States continues beyond 2017.

Higher Education

Higher education projections reflect expenditure projections for the Higher Education Support programme. The main element of this programme is the Commonwealth Grant Scheme. Other elements include supplementation for unfunded superannuation liabilities payments, support for students with a disability, and funding to universities with students from low socio-economic status backgrounds.

Official Development Assistance

Official Development Assistance projections reflect all Official Development Assistance‑eligible expenditure, and include both global (multilateral) and country (bilateral) programmes and some departmental funding.

Defence

Defence projections are on the basis of expense estimates for the Defence function (including the Department of Defence, Defence Materiel Organisation and other smaller agencies in the function). Superannuation costs and expenses related to the Department of Veterans’ Affairs and Defence Housing Australia are not included. The projections also include Defence function net capital investment, and as such the Defence projections are not pure expense numbers.

The Defence projections also differ slightly from the other expense projections, as they reflect the function and not the programme.

Job Seeker Income Support

Job Seeker Income Support projections include projections for Newstart Allowance and Youth Allowance (other). This projection is heavily dependent upon the assumed unemployment rate of around 6 per cent.

References

Australian Government 2014, Mid-Year Economic and Fiscal Outlook 2013-14, Australian Government, Canberra.

Department of the Treasury 2009, Economic Roundup, Report,Issue 3.