Community Sector Leaders Forum 29 May 2009 EMERGING ISSUES

1. Community Sector Leaders Forum29 May 2009EMERGING ISSUES Presented by Sue Ash, CEO & Irina Cattalini, Director Social Policy Facilitated by Chris Hall, WACOSS President

2. Changing Landscapes

3. Changes in the economic landscape

4. Economic Data The chart shows forecast negative growth figures for most major economies and the world as a Whole, for 2009 and 2010.

5. Economic Data The contraction in industrial production is particularly pronounced in our number one trading partner, Japan, showing -30% production for the period.

6. Economic Data While 6% real growth may appear relatively comfortable, factors such as the rate of internal migration and industrialization mean that 6% growth is effectively recessionary in the Chinese context. The outlook for China remains uncertain. It is largely dependent on the export of consumer goods, and is therefore highly sensitive to global variations in consumer demand. The CEO of BHP Billiton said on 27 May: “the outlook for China’s trade performance is still unclear, with the fall in exports hitting it much harder than was anticipated.”

7. Economic Data As a result of the global recession, Australia faces a period of contraction. The chart shows Australian GDP growth for the past two decades. It is expected that the next national accounts will show that we also contracted in Q1 2009. This is our first recession since 1991. The federal budget forecasts Australian real GDP to fall by 0.5% in calendar 2009. The budget forecasts below-trend growth of 2.25% in 2010-11, with above-trend growth thereafter.

8. Economic Data Treasury modelling shows that the economic stimulus package has had a significant impact on GDP growth. Treasury’s forecast for a 0.5% contraction in 2009 would have been a 2% contraction in the absence of the stimulus packages.

9. Economic Data The table shows the WA economy is expected to shrink by 1.25% in 2009-10, and by 0.5% in 2010-11, while the national economy will shrink only by 0.5% in 2009-10 and will grow by 2.25% in 2010-11.

10. Economic Data WA experienced significantly higher rates of growth in recent years than other States in Australia. In 2008-09, it’s estimated that the WA economy grew by 8% in real terms, while the national economy neither grew nor shrank. However, the medium-term forecast for WA is more pessimistic in some respects than the national outlook. Three interpretations: DTF is too pessimistic in its growth outlook for WA, or Federal Treasury is too optimistic in its growth outlook for Australia, or Both forecasts are accurate, and other States will grow much more rapidly than WA.

11. Economic Data Revenue growth for 2008-09 is only 1.7%, down from 10.1% last financial year. Expenses in the current financial year have grown 13%, mainly public sector wages growth, and are expected to overtake revenue for 2011-2013.

12. Economic Data WA’s share of national GST revenue was, in 2006-07, roughly in line with its share of population at 10%. In 2008-09 this has fallen to 8.7%. By 2011-12 it is projected to fall to 5.7%, meaning for every dollar West Australians pay in GST, the WA Government will receive only 57 cents, with the balance transferred to other States and territories

13. Economic Data The number of unemployed people in WA has already nearly doubled, increasing from 28 000 to 55 200. Unemployment is forecast to rise by a similar amount again between now and 2010-11, increasing by a further 27 170 for a total of 82 370 unemployed West Australians. We estimate that there will also be an additional 356 731 unemployed people in Australia by 2010-11.

14. Economic Data The chart shows that WA has had a significantly lower rate of unemployment than Australia for the past five years, but the gap is rapidly closing.

15. There are disturbing trends in welfare provision, with Governments increasingly favouring politically powerful or sympathetic groups such as seniors and disability pensioners while ignoring unemployed people and students.   Economic Data

16. Economic Data The inadequacy of Newstart Allowance, coupled with the rising number of unemployed people, means that the level of disadvantage in the community is likely to rise considerably. The chart below shows the rise in the number of people claiming Newstart and Youth Allowance (Other), the allowance that is paid to young unemployed people.

17. Emerging Issues - Economic ISSUE 1- FINANCE The lack of access to finance, which has caused the economic downturn, is affecting the sector’s capacity to do its work. How? Diminishing value of investments Reducing funding from government Making it more difficult to solve fundamental problems like housing and service

18. Emerging Issues - Economic ISSUE 2 - OPPORTUNITY Both State and Federal Governments are prioritising infrastructure spending to stimulate the economy. The emerging opportunity for the sector is to present initiatives that have a short term stimulus effect, at the same time as providing longer term sustainable benefits for our clients and organisations. Eg Jobs Fund tenders

19. Emerging Issues - Economic ISSUE 3 - INEQUITY The distinction of entitlements between ‘pensions’ and ‘allowances’ is widening, further entrenching the expectation of engagement with the labour market, either through volunteer work, education or training etc. Eg Weekly increase, stimulus payments vs capacity to work assessments, etc

20. Changes in the political landscape

21. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations COAG has reaffirmed its commitment to cooperative working arrangements through an historic new IGA that provides an overarching framework for the Commonwealth’s financial relations with the States and Territories (the States). 

22. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations The IGA represents the most significant reform of Australia’s federal financial relations in decades.  It is aimed at improving the quality and effectiveness of government services by reducing Commonwealth prescriptions on service delivery by the States, providing them with increased flexibility in the way they deliver services to the Australian people. 

23. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations The IGA provides a clearer specification of roles and responsibilities of each level of government and an improved focus on accountability for better outcomes and better service delivery.  This is accompanied by a major rationalisation of the number of payments to the States for Specific Purpose Payments (SPPs), reducing the number of such payments from over 90 to five.

24. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations Central to these reforms is a substantial financial package that provides an additional $7.1 billion in SPP funding to the States over five years to improve services for all Australians. 

25. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations Commonwealth-State financial relations have seen the creation of five new national SPPs, including total funding of: $60.5 billion in a National Healthcare SPP; $18 billion in a National Schools SPP;

26. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations $6.7 billion in a National Skills and Workforce Development SPP; $5.3 billion in a National Disability Services SPP; and $6.2 billion in a National Affordable Housing SPP.

27. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations Each SPP is associated with a National Agreement that contains the objectives, outcomes, outputs and performance indicators, and clarifies the roles and responsibilities that will guide the Commonwealth and States in the delivery of services across the relevant sectors. 

28. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations COAG agreed to six new National Agreements – National Healthcare Agreement, National Education Agreement, National Agreement for Skills and Workforce Development, National Disability Agreement, National Affordable Housing Agreement, and the National Indigenous Reform Agreement.

29. Political Data Intergovernmental Agreement (IGA) on Federal Financial Relations The performance of all governments in achieving mutually-agreed outcomes and performance benchmarks specified in each National Agreement will be monitored and assessed by the independent COAG Reform Council and reported publicly on an annual basis.  COAG agreed that the new National Agreements are central to achieving service delivery improvements and reforms.  The new federal financial framework began on 1 January 2009. The opportunities available for the sector to influence these decisions have been limited and ad hoc.

30. Political Data 2009 COAG Reform Council Since the COAG Reform Council’s first report to COAG in March last year, COAG has agreed to an expanded role for the Council as part of developing its reform agenda.  There are six NPs which identify a role for the COAG Reform Council in assessing performance: Hospitals and Health Workforce Reform; Preventative Health; Improving Teacher Quality; Literacy and Numeracy; Low Socio-economic Status School Communities; and Seamless National Economy.

31. Political Data COAG National Partnership Agreements Include data on objectives, outcomes, outputs and performance monitoring

32. Emerging Issues - Political ISSUE 1 – NATIONALISATION Social policy, service design and funding strategies have been nationalised through COAG processes, leading to greater engagement by state based community service organisations at a national level. Outcomes, outputs, performance indicators, data collection, funding has all been agreed and published The engagement with the sector on state based implementation is pending Our opportunity to influence has been ad hoc (eg SIB, CRTF, bureaucratic/government relationships)

33. Emerging Issues - Political ISSUE 2 – REVIEWS The need to engage in State and Federal Government reviews has become very important to the impact on our sector Red Tape, EAC, Early Years Leg Council PC, Henry, Harmer, Senate Employment Services

34. Questions?

35. Changes in the social landscape

36. Social Data Population Data: 2.2 million (Sep 08 quarter), up 2.9% or 626,000 people from last year – the highest increase in the country. WA, like Australia has an aging population, though the Aboriginal population has a younger profile.

37. Social Data Detail of People Living on Low and Fixed Income: How Many? At the 2006 Census, 92,541 households in the Perth-Mandurah area received gross weekly income less than $500. This was 19.8% of all households. Who? Household income is affected by the number of income earners in the household as well as the amount of income earned by each individual. The distribution of low income households shows some similarities to that of people aged 60 years and over, one-parent families with dependent children and unemployed people.

38. Social Data Detail of People Living on Low and Fixed Income: Where? Concentrations in eastern side of the city from around Balga in the north to Armadale in the south-east; In the southern coastal areas of Kwinana, Rockingham and Mandurah; and suburbs to the immediate south of Fremantle. These suburbs typically have more than one third of households classified as low income. Similar proportions were located in the south of the region, particularly in the suburbs of Calista, Medina, Rockingham, Shoalwater, Mandurah, Furnissdale and Coodanup.

39. Social Data Income Distribution The incomes of households considered to have the lowest levels of economic wellbeing (i.e. those people with household income between the bottom 10% and bottom 30% of incomes) grew by 8% ($24 per week) from 2003-04 to 2005-06, an 8% growth was also recorded for middle income people compared to 13% for high income people The distribution of net worth across households is very unequal, partly reflecting the common pattern of people gradually accumulating wealth throughout their working life. In 2005-06 the 20% of households with the lowest net worth accounted for only 1% of total household net worth, with an average net worth of $27,000 per household.

40. Social Data Effect of recession on the cost of living CPI Headline 2.2%, Mar 08 - Mar 09 Food up 8.6% Housing up 8.1% Health up 11.9% Education up 15%

41. Social Data

42. Social Data Despite the fall in some house purchase groups, the ratio of house prices to earnings remains considerably above its long term trend.

43. Social Data SOCIAL HOUSING The number of public rental dwellings in WA has now fallen to 1993 levels, despite an 18% increase in WA’s population over the last 15 years. More dwellings were built under the public housing rental program in the 1950s (an average of 1254 dwellings per year) than have been built this decade (an average of 913 dwellings per year), despite a 278% increase in WA’s population since 1950.

44. Social Data SOCIAL HOUSING Social housing represents approximately 4% of the total housing stock in WA, lower than any other Australian State, and than most comparable OECD nations. 20,000 people are currently waiting for a home in WA, many of whom have been waiting for 5 years or more.

45. Social Data PRIVATE RENTAL MARKET: REIWA predicts that the private rental market vacancy rate will rise above three per cent in mid-2009. A three per cent vacancy rate is widely seen as a ‘neutral’ figure; if the rate is below three per cent then rents are expected to rise, while a vacancy rate above three per cent would see rents fall in real terms. The vacancy rate has not exceeded three per cent in Perth since 2004.

46. Social Data PRIVATE RENTAL MARKET: However, rents have risen significantly faster than average wages in recent years. A prolonged period of stagnation or falls in rental prices would be necessary to restore the affordability of earlier years. The median weekly rent in Perth is $370 per week according to REIWA. While this figure did not increase during the first quarter of 2008, it is 15.6% above the median rent 12 months ago.

47. Social Data Housing for government and corporate employees in regional WA is supported with private subsidies or GROH. The NFP sector and general public are exposed to prices at the rates in the columns above.

48. Social Data Regional Cost Loadings Infrastructure, development and maintenance in regional areas is compounded by regional cost loadings. Examples of regional loadings are: Broome & Roebourne: 150% Kalgoorlie: 125% Albany: 115% The extreme weather conditions from heat to wet in remote regional locations increases maintenance demand. These conditions promote rot, corrosion and also increase maintenance costs on electrical systems.

49. Social Data HOMELESSNESS Despite the economic prosperity of recent years, the number of homeless people in Western Australia has risen. The rate of homelessness in WA is the second worst of any State (64 per 10 000 people), and is significantly worse than the national average (53 per 10 000 people).

50. Social Data Unemployment is likely to place some mortgagee households in an untenable situation, leading to greater incidence of forced sales and repossession. Supreme Court of WA data, shows the number of property repossessions increasing per quarter in WA since mid-2000.