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 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 the NDIA are discussed in separate overviews.

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 2024–25 PBS for the Social Services portfolio — excluding Services Australia and the NDIA — the aggregated budgeted expenses for 2024–25 total $183.9 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 2024–25 Portfolio Budget Statements.

In determining the 2024–25 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 are effectively and lawfully applied to achieve intended policy outcomes, through program delivery by the department, the National Disability Insurance Scheme, Services Australia, state and territory governments and third party providers.

As the administrator of the Community Grants Hub, the department must ensure grant program outcomes are delivered in a manner consistent with the Commonwealth Grant Rules and Guidelines (CGRGs).

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

Governance

In delegating to or relying on other government entities or third party providers for service delivery functions, the department has to develop and implement fit for purpose governance arrangements to maintain oversight of its policy responsibilities. Audit work and the findings of the Royal Commission into the Robodebt Scheme and the Commonwealth Ombudsman’s own motion review into income apportionment have highlighted the risks posed by ineffective oversight and risk management of joint service delivery arrangements, including legal risks .

It is important for entities to have effective risk management practices for the delivery of cyber security by an ICT service provider, such as the shared services provided by Services Australia. 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 .

Grants administration

The department 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 Commonwealth Grant Rules and Guidelines  is an ongoing risk for the department.

The department 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 .

Audits have highlighted deficiencies with performance measures and evaluation planning . The collection and integrity of baseline data is critical to support evaluation planning and inform continuous improvement activities and future policy advice. The delivery of programs and achievement of policy objectives must be demonstrated by robust and verifiable performance information and evaluation findings .

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 2019–20 and 2023–24 entities within the Social Services  portfolio were included in tabled ANAO performance audits 11 times . The conclusions directed toward entities within this portfolio were as follows:

• two were unqualified;
• six were qualified (largely positive);
• two 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 2019–20 and 2023–24 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2019–20 to 2023–24: 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 2019–20 and 2023–24

Source: ANAO data.

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 2024–25 are $183.7 billion, with 78 per cent attributable to personal benefits and 2 per cent attributable to grants. Receivables represent 75 per cent of total budgeted assets, while provisions represent 50 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 2024–25 Portfolio Budget Statements.

There are four key risks for DSS’s 2023–24 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)
• The validity of personal benefits receivables, as DSS is managing a legal matter that was the subject of an own-motion investigation by the Office of the Commonwealth Ombudsman into the practice of income apportionment for personal benefit payments which may impact the personal benefits recognised.

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 187 hearing centres and 288 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 2022–23 was $284.0 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 2022–23 annual report.

The key risks for Hearing Australia 2023–24 financial statements that the ANAO has highlighted for specific audit coverage are:

• The revenue recognition from contracts with customers due to complexity and significant judgement applied by management in determining these balances.
• The implementation of new Enterprise Resource Planning software, specifically the migration of data and the design and implementation of new processes and controls.
• Completeness and accuracy of transactional data within the recently implemented financial management system, Microsoft Dynamics.