Portfolio overview

The Social Services portfolio is responsible for achieving the Australian Government’s social policy outcomes and delivering social security priorities through policy advice, program administration and research.

The Department of Social Services (DSS) is the lead entity in the portfolio and has four core areas of responsibility:

  • a sustainable social security system that incentivises self-reliance and supports people who cannot fully support themselves by providing targeted payments and assistance;
  • contributing to stronger and more resilient individuals, children, families and communities by providing targeted supports;
  • supporting the independence of, and economic participation by, people with a disability and carers by providing targeted supports; and
  • improving housing affordability, supporting social housing for individuals and preventing and addressing homelessness by providing targeted support.

Further information is available from the department’s website.

In addition to DSS, the portfolio includes Services Australia, Australian Hearing Services, the National Disability Insurance Agency (NDIA), the Australian Institute of Family Studies, the NDIS Quality and Safeguards Commission, and the Domestic, Family and Sexual Violence Commission. The entities within the Social Services portfolio administer services and programs with other government entities, non-government organisations, program participants and other stakeholders. Audit considerations for the portfolio entities Services Australia and NDIA are discussed in separate overviews.

In the 2023–24 Portfolio Budget Statements (PBS) for the Social Services portfolio — excluding Services Australia and the NDIA — the aggregated budgeted expenses for 2023–24 total $172.0 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through annual appropriation Acts.

The level of budgeted departmental and administered expenses, and the average staffing level for entities in the GGS within this portfolio are shown in Figure 1. DSS represents the largest proportion of the portfolio’s expenses, and administered expenses are the most material component, representing just under 100 per cent of the portfolio expenses.

Figure 1: Social Services portfolio – total expenses and average staffing level by entity

Portfolio expenses and staffing level

Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.

Audit focus

In determining the 2023–24 audit work program, the ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement. The ANAO also considers emerging risks from new investments, or changes in the operating environment and coverage across the sector.

The primary risks identified for the portfolio relate to ensuring allocated resources achieve the government’s intended outcomes through:

  • the department gaining assurance over services and payments delivered for it by others (in particular Services Australia, and through states and territories), particularly in light of testimony before the Royal Commission into the Robodebt Scheme; and
  • the department’s management of the Community Grants Hub to deliver grant program outcomes in a manner consistent with the Commonwealth Grant Rules and Guidelines (CGRGs).

Specific risks in the Social Services portfolio relate to governance, service delivery, grants administration and policy development.

Governance

DSS is jointly responsible, with portfolio entities and third-party providers, for the delivery of diverse programs and payments. This requires effective oversight of service delivery partners to ensure payments and services are meeting agreed requirements and expectations. Active management of shared service delivery risks is also required. The Government’s response to Services Australia’s Income Compliance Program (also known as Robodebt), as well as testimony and submissions to the Royal Commission into the Robodebt Scheme, have highlighted the risks posed by ineffective oversight and risk management of joint service delivery arrangements.

It is important that DSS gains adequate assurance over the accuracy and timeliness of third-party service delivery and the integrity of third-party information.

    • The DSS Data Exchange web portal (DEX) represents DSS’s approach to streamlined mandatory grants program reporting. To support effective policy development and program management, DSS needs to gain assurance over the information entered into DEX by third-party providers.

Achieving DSS’s policy objectives and program outcomes requires DSS to have effective implementation and evaluation planning which informs data collection, performance monitoring and reporting. Audits have highlighted problems with performance measures and evaluation planning. DSS must actively collect, use and report performance information and evaluation findings to refine the delivery of programs and demonstrate the achievement of policy objectives.

It is important for entities to have effective risk management practices for cyber security. This includes conducting assessments of the effectiveness of security controls, security awareness training, and adopting a risk-based approach to prioritise improvements to cyber security. Weaknesses in the implementation and operation of governance and monitoring processes relating to cyber security increase the risk of unauthorised access to systems and data held by entities.

Service delivery

Many DSS interventions rely on collaboration and partnership with the states and territories and the local community sectors. Effective third party, peak body and other stakeholder management is an essential aspect of the service delivery model.

Grants administration

DSS administers grants programs in the areas of families and communities, housing and homelessness, disability and mental health. It also delivers grant administration services on behalf of Commonwealth entities through the Community Grants Hub.

    • Delivering grants programs in a manner consistent with the CGRGs is an ongoing risk for the department.
    • An audit has found deficiencies in the delivery of the Community Grants Hub, including in relation to the management of grants administration data. These deficiencies pose a risk to the achievement of the intended benefits of a shared services hub arrangement.
    • DSS needs to consider how the intended benefits from the delivery of grants programs through a hub can be better demonstrated and how Commonwealth grants administration and payments data quality can be assured.

Policy development

To support the government in achieving social policy outcomes and delivering social security priorities, DSS needs to provide timely and robust policy advice on the impact of emerging social, demographic, economic and technological changes on existing policy settings and opportunities for improvement and reform. Such advice needs to include frank assessment of implementation risks and be based on the best available evidence, including evidence from performance information and evaluation findings.

Previous performance audit coverage

The ANAO’s performance audit activities involve the independent and objective assessment of all or part of an entity’s operations and administrative support systems. Performance audits may involve multiple entities and examine common aspects of administration or the joint administration of a program or service.

During the performance audit process, the ANAO gathers and analyses the evidence necessary to draw a conclusion on the audit objective. Audit conclusions can be grouped into four categories:

  • unqualified;
  • qualified (largely positive);
  • qualified (partly positive); and
  • adverse.

In the period between 2018–19 to 2022–23 entities within the Social Services portfolio were included in tabled ANAO performance audits 12 times. The conclusions directed toward entities within this portfolio were as follows:

  • two were unqualified;
  • six were qualified (largely positive);
  • three were qualified (partly positive); and
  • one was adverse.

Figure 2 shows the number of audit conclusions for entities within the Social Services portfolio that were included in ANAO performance audits between 2018-19 and 2022–23 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2018–19 to 2022–23: entities within the Social Services portfolio compared with all audits tabled

 

Source: ANAO data

The ANAO’s annual audit work program is intended to deliver a mix of performance audits across seven audit activities: governance; service delivery; grants administration; procurement; policy development; regulation and asset management and sustainment. These activities are intended to cover the scope of activities undertaken by the public sector. Each performance audit considers a primary audit activity. Figure 3 shows audit conclusions by primary audit activity for audits involving entities in the Social Services portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Social Services portfolio compared with all audits tabled between 2018–19 and 2022–23

 

Source: ANAO data.

Performance statements audit

The audit of the 2022–23 Department of Social Services (DSS) annual performance statements is being conducted following a request from the Minister for Finance on 16 January 2023, under section 40 of the Public Governance, Performance and Accountability Act 2013. The audit is conducted under section 15 of the Auditor-General Act 1997.

DSS has been included in the assurance audit program for the audit of annual performance statements since the commencement of the pilot in 2019–20. There is one carried over category A finding and one carried over moderate finding reported as a result of the 2022–23 interim audit procedures, relating to the reported results for the 1800RESPECT and Carer Gateway measures and the department’s inability to gain assurance over them.

Key risks for DSS’s performance statements that the ANAO has highlighted include:

  • Assurance over the completeness and accuracy of results for the data;
    • received for the 1800RESPECT call service;
    • received for the Carer Gateway call service; and
    • entered into the Data Exchange system by third party providers in receipt of grant funding.
  • Overall completeness of performance information reported in DSS’s annual performance statements.

Financial statements audits

Overview

Entities within the Social Services portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Social Services portfolio entities and risk profile

 

Type of entity

Engagement risk

Number of higher risks

Number of moderate risks

Material entities 

Department of Social Services

Non-corporate

High

2

1

Australian Hearing Services

Corporate

Low

1

0

Non-material entities 

Australian Institute of Family Studies

Non-corporate

Low

 

 

Domestic, Family and Sexual Violence Commission

Non-corporate

Low

 

 

NDIS Quality and Safeguards Commission

Non-corporate

Low

 

 

Material entities

Department of Social Services

The Department of Social Services (DSS) is responsible for social security, families and communities, disability and carers, and housing. DSS works in partnership with other government and non-government organisations on a range of policies, programs and services focused on improving the wellbeing of people and families in Australia.

DSS’s total budgeted expenses for 2023–24 are just over $171.8 billion, with 80 per cent attributable to personal benefits and 2 per cent attributable to grants. Receivables represent 73 per cent of total budgeted assets, while provisions represent 49 per cent of total budgeted liabilities, as shown in Figure 4.

Figure 4: Department of Social Services’ total budgeted financial statements by category ($’000)

 
 

Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.

There are three key risks for DSS’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage, including three risks that the ANAO considers potential key audit matters (KAMs).

  • The accuracy and occurrence of personal benefits expenses which represent a significant outlay for the Australian Government. Under the Bilateral Management Agreement between DSS and Services Australia, personal benefits payments are delivered by Services Australia on behalf of DSS. Due to their demand driven nature, these payments are often impacted by changes in the market and/or environmental conditions. (KAM – Accuracy and occurrence of personal benefits expenses)
  • The valuation of personal benefits provisions and receivables, as they include estimates relating to amounts payable/receivable to/from individuals within the community, in accordance with legislative requirements and government policy decisions. The estimates are based on historical data and DSS’s assessment of the number of eligible recipients, claim rates and recipient’s behaviour. (KAM – Valuation of personal benefits provisions and receivables)
  • The validity of grants expenses, as DSS administers a number of significant grant programs and has streamlined these grants based on common social policy functions. The grants are administered and reported through an in-house IT system, Grants Payment System (GPS). The GPS system is utilised by DSS for the administration of the DSS Community Grants Hub, which provides grant services to DSS and other Government agencies, through Partnership Agreements. (KAM – Validity of grants expenses)

Australian Hearing Services

Australian Hearing Services (Hearing Australia) is a corporate Commonwealth entity established under the Australian Hearing Services Act 1991. Hearing Australia is responsible for the provision of research and hearing services through a network of 185 hearing centres and 330 visiting sites. Services provided include subsidised hearing services to eligible clients under the Australian Government’s Hearing Services Program.

Hearing Australia’s total actual revenue for 2021-22 was just under $267.8 million, with 91 per cent attributable to revenue from contracts with customers, as shown in Figure 5.

Figure 5: Australian Hearing Services’ actual financial statements by category ($’000)

 
 

Source: ANAO analysis of Australian Hearing Services 2021-22 annual report.

The key risk for Hearing Australia 2022–23 financial statements that the ANAO has highlighted for specific audit coverage is:

  • The revenue recognition from contracts with customers due to complexity and significant judgement applied by management in determining these balances.