Social Services portfolio

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 two 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; and
• contributing to stronger and more resilient individuals, children, families and communities by providing targeted supports.

Further information is available from the department’s website.

In addition to DSS, the portfolio includes the Australian Institute of Family Studies, the Domestic, Family and Sexual Violence Commission, and the National Commission for Aboriginal and Torres Strait Islander Children and Young People. The entities within the Social Services portfolio administer services and programs with other government entities, non-government organisations, program participants and other stakeholders.

The Portfolio Budget Statements (PBS) contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through annual appropriation Acts. In the 2026–27 PBS for the Social Services portfolio the aggregated budgeted expenses for 2026–27 total $165.6 billion.

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

Source: ANAO analysis of 2026–27 Portfolio Budget Statements.

In determining the 2026–27 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 ANAO has considered the final report of the capability review of the Department of Social Services (DSS) that was tabled in the Australian Parliament on 16 October 2025. 

The primary risks identified for the portfolio relate to:

• Ensuring allocated resources are effectively and lawfully applied to achieve intended policy outcomes, through program delivery by DSS, state and territory governments and third party providers.
• DSS’ reliance on third parties and their legacy systems and the capacity for increased requests for review in this context.
• DSS’ capacity to deliver the Community Grants Hub in a way consistent with the Commonwealth Grants Rules and Principles and achieve the efficiency and effectiveness intended when the hub was implemented.

Specific risks in the Social Services portfolio relate to governance, grants administration, and policy development, stewardship (including lawfulness) and Cyber and ICT.

Governance

In delegating to or relying on other government entities or third party providers for service delivery functions, DSS must develop and implement fit-for-purpose governance arrangements to maintain oversight of its policy responsibilities. Previous reviews of DSS have highlighted the risks posed by ineffective oversight and risk management of joint service delivery arrangements, including legal risks.

Legal governance continues to be an important risk considering the complex social services legislation administered by DSS with the support of Services Australia, for payment and compliance processes over personal benefits. Systems to facilitate the early identification and reporting of potentially significant legal risks across the portfolio are essential for the effective management of legal governance, accounting and external reporting processes. In January 2026, the Commonwealth Ombudsman reported that Services Australia had knowingly not followed the law in relation to payments where a person may have had less than 35 per cent care, and that the Department of Social Services had shown a lack of urgency in seeking legislative change. 

It is important for entities to have effective risk management practices for the delivery of cyber security by an ICT service provider including service provided by other government entities. 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. 

Machinery of Government changes require close management to ensure continuity of business, management of risk and cost and support to the government, employees and stakeholders. 

Grants administration

DSS administers grants programs for families and communities. 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 Commonwealth Grant Rules and Principles   is an ongoing risk for the Department.

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

In providing robust policy advice, a frank assessment of implementation risk based on best available evidence should be taken into account. 

Previous audits have identified weaknesses in the Department’s use of program evaluation to examine whether government initiatives are cost effective and achieving intended outcomes. 

Stewardship

DSS must deliver social security outcomes in a sustainable and lawful way. This includes maintaining the currency of the Social Security Guide and other resources.

Cyber and ICT

To achieve intended outcomes, DSS must ensure that these outcomes can be effectively and efficiently achieved by the systems of its partner agencies.

DSS must also ensure that it has the capability to respond to increased challenges of decisions or requests for review.

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 2021–22 and 2025–26 entities within the Social Services   portfolio were included in tabled ANAO performance audits twelve times.   The conclusions directed toward entities within this portfolio were as follows:

• two were unqualified;
• four were qualified (largely positive);
• five 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 2020–21 and 2024–25 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2021–22 to 2025–26: 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 2021–22 to 2025–26

Source: ANAO data.

Department of Social Services

The Department of Social Services (DSS) is responsible for social security, families and communities, disability employment services and carers. 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 administered expenses for 2026–27 are $165.5 billion, with 98 per cent attributable to personal benefits and one per cent attributable to grants. Receivables represent 93 per cent of total budgeted administered assets, while provisions represent 47 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 2026–27 Portfolio Budget Statements.

There are four key risks for DSS’s 2025–26 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 and contingent liabilities, 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, receivables and related contingencies)
• 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)
• Governance and compliance monitoring of legal and other matters, as DSS administers a number of complex legislations, which requires significant judgement in interpretation and application. Misinterpretation or incorrect application of legislative requirements could lead to non-compliance and potential misstatement to financial statements.