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 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 disability and carers by providing targeted supports; and
• improving housing affordability, supporting social housing for individuals and preventing and addressing homelessness by providing targeted supports.

Further information on the department’s responsibilities can be obtained from the department's website.

In addition to DSS, the portfolio includes Services Australia, Australian Hearing Services, the National Disability Insurance Agency (NDIA), Australian Institute of Family Studies and the NDIS Quality and Safeguards 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 2022–23 Portfolio Budget Statements (PBS) for the Social Services portfolio — excluding Services Australia and NDIA — the aggregated budgeted expenses for 2022–23 total $153.7 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through the 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’s expenses.

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

Note: Excludes Services Australia and NDIA.

Source: ANAO analysis of 29 March 2022–23 PBS.

In determining the 2022–23 audit work program, 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, reforms or changes in the operating environment.

The primary risks identified for the portfolio relate to the department gaining assurance over services delivered for it by others (in particular Services Australia and through states and territories) and the department’s responsibilities for the Community Grants Hub delivering grant program outcomes in a manner consistent with the Commonwealth Grant Rules and Guidelines (CGRGs), in order to ensure that the resources allocated achieve the outcomes that the government is seeking.

DSS’s business-as-usual strategic risks predominantly relate to governance, service delivery and grants administration.

Governance

DSS is jointly responsible, with portfolio entities and third-party providers, for the delivery of diverse individual programs and payments. This requires effective oversight of service delivery to ensure services are meeting agreed requirements and expectations. Active management of shared service delivery risks is required. 

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. DSS needs to gain assurance over the information entered into DEX by third-party providers to effectively inform policy and program development and management. DSS information technology functions and staff transferred to Services Australia when it was established as an executive agency in February 2020. Risks are introduced by reliance on Services Australia’s information technology systems and control environment, which forms a significant component of the overall integrity and reliability of financial transactions. 

Achieving DSS’s policy objectives and program outcomes requires DSS to have effective implementation planning and performance monitoring and reporting. Audits have highlighted problems with performance measures.  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 provides shared-services arrangements to deliver grant administration services on behalf of Commonwealth entities through the Community Grants Hub.

• Delivering grants programs in a manner consistent with 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 benefits meant to be realised through an Australian Government grants hub.
• DSS needs to consider how the anticipated benefits from delivery of grants programs through a hub can be better demonstrated and how Commonwealth grants administration and payments data quality can be assured.

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

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 2022–23 are just over $153.6 billion, with 82 per cent of these expenses attributable to personal benefits and 2 per cent attributable to grants, as shown in Figure 2. Personal benefits provisions and payables represent 58 per cent and 31 per cent, respectively, of total budgeted liabilities. Total budgeted receivables are just under $5.3 billion, representing 83 per cent of total budgeted assets.

Figure 2: Department of Social Services’ total budgeted financial statements by category

Source: ANAO analysis of 29 March 2022–23 PBS.

Financial statements audit

There are three key risks for DSS’s 2021–22 financial statements that the ANAO has highlighted for specific audit coverage, all of which the ANAO considers potential key audit matters (KAMs).

• The high volume and varying complexity of personal benefit payments processed by Services Australia on complex IT systems, and the reliance on the correct disclosure of personal circumstance information by a large number of recipients across diverse social economic groups. (KAM – Accuracy and occurrence of personal benefit expenses)
• The significant judgements and assumptions made in the estimation models for the valuation of personal benefit provisions and receivables, the accuracy and completeness of the source data used by the actuary in developing the estimation of the provisions and receivables, and the potential impacts of COVID-19 on the actuarial valuations. (KAM – Valuation of personal benefit provisions, receivables and contingencies)
• The large number of grant programs with differing legislative and policy requirements, which makes the management of grant processes complex. (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. It does this through a national network of 170 hearing centres and 330 visiting sites. Hearing Australia provides subsidised hearing services to eligible clients under the Australian Government’s Hearing Services Program and to self-funded clients. Hearing Australia works with Aboriginal Community Controlled Health Organisations to promote ear health.

Hearing Australia’s total actual revenue for 2020–21 was just over $274.5 million, with 94 per cent of revenue attributable to contracts with customers, as shown in Figure 3.

Figure 3: Australian Hearing Services’ total actual financial statements by category

Source: ANAO analysis of Australian Hearing Services’ 2020–21 annual report.

There is one key risk for Hearing Australia’s 2021–22 financial statements.

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