SOCIAL TRANSFERS IN KIND

INTRODUCTION

The Survey of Income and Housing (SIH) collects the value of Australian government cash pensions and allowances, such as the Age Pension and Family Tax Benefit, directly from survey respondents. However, the government also provides goods and services to households for free or at subsidised prices e.g. education, health, housing and child care. In output from the SIH, these are called social transfers in kind (STIK).

The inclusion of both government social assistance benefits in cash and STIK in analyses of household income provides a more comprehensive picture of the income circumstances of different groups in the population.

In the SIH, government expenditure on STIK is only allocated to households when it can be related to particular types of households e.g. school education expenditure can be allocated to households with school age children.

Until 2009–10, STIK were allocated to households as part of a fiscal incidence study conducted using data from the six-yearly HES. In this study, income tax and taxes on production (such as the GST) were also allocated to households to provide a complete picture of the effects of taxation and government expenditure on the distribution of income among households. The results of these studies are published in Government Benefits, Taxes, and Household Income, Australia for the years 1984, 1988–89, 1993–94, 1998–99, 2003–04, 2009–10 and 2015–16.

Since the 2011–12 SIH, estimates of STIK received by households have been published as part of standard survey outputs. In 2011–12, analysis of STIK was presented in the 'Appendix 4 Social transfers in kind' section of the publication Household Income and Income Distribution, Australia, 2011–12 and in a separate data cube available from the 'Downloads' tab of that publication. From 2013–14, the STIK tables have been integrated with other survey outputs in the data cubes accompanying the publication Household Income and Wealth, Australia.


INCOME CONCEPTS

In the Excel data cubes accompanying the publication Household Income and Wealth, Australia 2017–18 tables are included detailing the estimated amount of government benefits received by households. In these tables, net imputed rent has been included as a component of private income. The inclusion of imputed rent is a broader concept of private income than is included in most tables in that publication. The inclusion of net imputed rent for owner-occupied dwellings and for subsidised private rentals allows for more meaningful comparisons of the income circumstances of people living in different tenure types.

Tables presenting analysis of the government benefits received by households (both cash and in-kind), include the following components of income:

• private income (including imputed rent) which includes employee income, profit/loss from own unincorporated business, net investment income, private transfers, overseas pensions, and net imputed rent for owner-occupied dwellings and subsidised private rentals
• gross income (including imputed rent) which is the sum of private income (including imputed rent) and Australian government social assistance benefits in cash (direct Australian government benefits)
• disposable income (including imputed rent and STIK) which is derived by adding imputed rent and STIK to gross income and subtracting estimates of taxes on personal income.

For further information on the income concepts and components, see the 'Income' section of this publication and for imputed rent, see the 'Imputed rent' section of this publication.


DATA SOURCES AND METHODOLOGIES

ABS Government Finance Statistics (GFS) were the main source for valuing the cost to government of the provision of STIK. The total value of STIK is defined as Commonwealth, state or territory and local government expenses, net of intra-government transfers, minus personal benefit payments paid in cash minus government revenue from the sale of goods and services.

Resident population estimates used to calculate some STIK estimates were taken from the publication Australian Demographic Statistics, June 2018.

Information reported in the SIH on the composition and characteristics of household members has been used as the basis for allocating STIK to individual households. Estimates for STIK in this study have been modelled using approaches consistent with the 2015–16 fiscal incidence study. A detailed explanation of the methodologies used in 2015–16 is provided in 'Methodology for allocating Taxes on Production (Appendix)' in the 'Explanatory Notes' section of the publication Government Benefits, Taxes, and Household Income, Australia, 2015–16.

In the 2011–12 study, the methodologies for some health and education benefits were slightly different as not all of the detailed data used in the previous study was collected in that SIH cycle. These differences are explained in 'Appendix 4 Social transfers in kind' of the publication Household Income and Income Distribution, Australia, 2011–12.

Education

STIK were allocated for school education, tertiary education, and other education benefits. School education includes benefits from pre-school, primary and secondary education, and student transportation. Tertiary education includes benefits from university education and technical and further education. Other education includes benefits from special education and education not elsewhere classified.

The value of education benefits received by members of individual households was allocated based on reported characteristics and summed to the household level. This included the type of institution attended (such as, secondary school or university) as well as whether the institution was a public or private institution (such as, schools run by the Catholic Church or other private organisations).

Of the $73.8 billion available for allocation in 2017–18, $71.6 billion (97%) was allocated.

School education

Data on the number of children attending pre-school in each state or territory were obtained from the publication Childhood Education and Care, Australia, June 2017. Pre-school figures were adjusted to represent the SIH reference period using the change in the number of 3 to 5 year olds over this period according to Australian Demographic Statistics, June 2018. The benefit received by households was the estimated number of children attending pre-school in each household multiplied by the average pre-school benefit for their state or territory of residence.

Primary and secondary school data on average expenditure per student was obtained from the Report on Government Services (ROGS) for government school children, and from the Department of Education and Training, for non-government school students. An average benefit, for both education and transportation, was calculated for six student types: government primary, Catholic primary, other non-government primary, government secondary, Catholic secondary and other non-government secondary. Numbers of full-time equivalent students in August 2016 and August 2017 were obtained from the publication Schools, Australia, 2017.

Of the $51.5 billion available for allocation in 2017–18, $49.3 billion (96%) was allocated.

Tertiary education

Government expenses relating to university education and Technical and Further Education (TAFE) were allocated to tertiary education students. Average benefits were derived by dividing GFS expenses by total enrolments from Education and Work, Australia, 2018. Part-time students were assumed to receive half the benefits of full-time students. Benefits were allocated to households according to the number of members who reported themselves as attending university education or TAFE.

Of the $17.2 billion available for allocation in 2017–18, $17.5 billion (102%) was allocated.

Other education benefits

Government expenses relating to special and other education were allocated equally to each pre-school and school student, and household benefits were the sum of household members' benefits.

Of the $5.0 billion available for allocation in 2017–18, $4.8 billion (96%) was allocated.

Health

Health benefits were allocated for acute care institutions, community health services, pharmaceuticals, the Private Health Insurance Rebate (PHIR), and other health benefits. Other health benefits cover public health services, health research, and health administration not elsewhere classified.

Except for the PHIR, these benefits were allocated to households according to an insurance premium approach, that is, household members were allocated benefits according to the average utilisation rates for their age, sex, and state or territory of residence. Additionally for people with a disability or long term health condition, a higher utilisation rate was estimated, depending on their level of disability, using data on usage of health services collected in the publication Australian Health Survey: First Results, 2011–12 and Australian Health Survey: First Results, 2014–15.

Of the $126.9 billion available for allocation in 2017–18, $120.1 billion (95%) was allocated.

Acute care institutions

Government expenses relating to acute care institutions were allocated to all household members according to hospital bed utilisation for their age, sex, and state or territory of residence. Hospital utilisation was used as an indicator of the use of all institutional services and benefits, and utilisation rates were calculated using unpublished data on patient days obtained from Australian Hospital Statistics, 2015–16 (AIHW).

The benefit allocated to households was the sum of each member's utilisation rate multiplied by the average benefit per hospital bed day in their state or territory of residence. The average benefit per hospital bed day was derived by dividing GFS expenses by the number of days spent in hospital. A higher utilisation rate was applied to people with a disability.

Of the $52.8 billion available for allocation in 2017–18, $52.7 billion (100%) was allocated.

Community health services

Government expenses relating to community health services were allocated to all household members according to the doctor visit rate for their age, sex and state or territory of residence. Doctor visits were used as an indicator of utilisation for all non-institutional benefits and services (e.g. dentists, optometrists and specialists). Utilisation rates for doctors were calculated using data obtained from the Department of Human Services (Medicare). A higher utilisation rate was applied to people with a disability.

The benefit allocated to households was the sum of each member's utilisation rate multiplied by the average benefit per doctor visit. A higher utilisation rate was applied to people with a disability.

Of the $39.1 billion available for allocation in 2017–18, $33.5 billion (86%) was allocated.

Pharmaceuticals

Government expenses relating to pharmaceuticals, medical aids, and appliances were allocated to all household members according to their eligibility for pharmaceutical concessions and average usage of prescribed medicines for their age, sex, and state or territory of residence.

Household benefits were the sum of each household member's utilisation rate (provided by the Department of Health) multiplied by the average benefit per prescribed medicine according to their eligibility for concessions. Average benefits per prescribed medicine for those eligible or not eligible for concessions were derived by dividing GFS expenses by total prescribed medicine utilisation for the two groups. For persons receiving concessions, total prescribed medicine utilisation was the product of benchmark numbers of holders of each type of concession card multiplied by the average utilisation rate for those eligible for concessions. For others, total prescribed medicine utilisation was the product of the estimated resident population (minus those who are holders of concession cards) multiplied by the average utilisation rates. A higher utilisation rate was applied to people with a disability. Benefits were adjusted according to total government expenses in each state and territory.

Of the $13.5 billion available for allocation in 2017–18, $13.3 billion (98%) was allocated.

Private Health Insurance Rebate

The Private Health Insurance Rebate (PHIR) was allocated to households that reported expenditure on private health insurance. This expenditure was collected net of the PHIR. The value of the PHIR allocated to each household was calculated based on the income and age of persons in each household to take account of the means testing of the PHIR introduced in 2012.

Of the $6.0 billion available for allocation in 2017–18, $5.6 billion (93%) was allocated.

Other health benefits

Government expenses relating to public health, health research, and health administration not elsewhere classified, were allocated to all household members. An average benefit was derived by dividing GFS expenses per state and territory by the estimated resident population, from the publication Australian Demographic Statistics, June 2018.

Benefits per household were equal to the number of household members multiplied by the average benefit.

Of the $15.5 billion available for allocation in 2017–18, $15.0 billion (97%) was allocated.

Social security and welfare

Social security and welfare benefits were allocated for child care assistance and for all other social security and welfare benefits.

Of the $46.7 billion available for allocation in 2017–18, $35.4 billion (76%) was allocated.

Child care assistance

The government provides two different payments to assist households with the cost of approved child care: the Child Care Benefit (CCB), and the Child Care Rebate (CCR).

CCB was modelled at the income unit level depending on the number of children in formal care, the reported hours of care, and the relevant income thresholds and tapers (obtained from the Department of Education). The CCR allocated to relevant households was based on both reported and modelled data at the income unit level calculated using the eligibility criteria for the payment.

Of the $7.0 billion available for allocation in 2017–18, $7.2 billion (103%) was allocated.

Other social security and welfare benefits

Government expenses relating to other social security and welfare programs, other than expenditure on direct cash payments, child care, and residential aged care, were allocated to persons who received social security and welfare benefits.

Average STIK for different types of benefit recipients were calculated by dividing the GFS expenses for each category of expenditure by the number of recipients based on data obtained from the Department of Social Services and Department of Veterans’ Affairs, then adjusted to ensure people receiving multiple benefits were not double counted.

Of the $39.7 billion available for allocation in 2017–18, $28.1 billion (71%) was allocated.

Housing

Housing benefits were allocated to households in government rental accommodation according to the estimated value of rental subsidy that they received. The value of the subsidy was calculated as the difference between the estimated market rent for their dwelling if it were to be privately rented, less the actual rent paid by households. In total, $2.6 billion was allocated in 2017–18.

STIK for housing do not include Rent Assistance (RA) because it is included in social assistance benefits in cash. The purchase of new dwellings for future subsidised rental is also not included because it is treated as capital expenditure which will provide benefits to future subsidised renters.

Electricity Concessions

All state and territory governments provide concessions or rebates on electricity bills to certain households. In this study, government expenses for electricity concessions were allocated to households who were eligible to receive the relevant concessions or rebates. As each state and territory has different concession rates and eligibility requirements, these expenses were allocated to eligible households according to the value of the concession in their state or territory of residence. In total, $813 million was allocated in 2017–18.