Refugee Council of Australia
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An unnecessary penalty: Economic impact of SRSS changes

Appendix 2: Homelessness studies

In March 2015, Cameron Parsell and colleagues studied a group of 41 people in Brisbane. They compared services used by the group when they were homeless with services used after they moved into supported housing. Service data and costs were available from: police, prison, probation, parole, courts, emergency department, hospital admitted patients, ambulance, mental health and homelessness services. In total:

  • In the first twelve months, when people were homeless, the cohort used health, criminal justice and homelessness services that cost the state government $2 million, or an average $48,000 per person (these costs varied widely between different participants).
  • In the twelve months as tenants of supportive housing, the cohort’s service costs were less than half, some $850,000, or an average of $20,800 per person. In addition, the state government provided supportive housing at the cost of $14,329 per person, bringing the total cost per person to $35,129.

The researchers emphasised that they were looking at cost offsets, not a full cost benefit approach:

Our data show cost offsets that are directly attributed to reduced service usage, but we have not speculated or analysed broader cost benefits that may be attributed to improved health, well-being, labour market participation and other qualitative dimensions such as family relationships, caring responsibilities and social participation.

David MacKenzie and colleagues focused in 2016 on youth homelessness across Australia. In the first of its kind, the longitudinal study attempted to understand the experience and impacts of youth homelessness in terms of economic costs to the Australian community. They surveyed 394 young people, 298 of them homeless. While their cost numbers differed from the Parsell study, they painted a similar picture:

  • Health services for homeless young people cost an average of $8,500 per person per year. This is $6,700 more than the average for long-term unemployed youth, who are another key group of disadvantaged youth.
  • Homeless young people are much more likely to have contact with the criminal justice system, both as victims and defendants. This costs an average of $9,400 per person per year, $8,200 more than the average for long-term unemployed youth.
  • The total cost of health services and the justice system due to young people experiencing homelessness averages $17,900 per person per year; $15,000 more than unemployed youth.

Lisa Wood and colleagues looked at just the health costs for a group of previously homeless people in Perth. The group surveyed a ‘voluminous literature’, including previous Australian Housing and Urban Research Institute reports. They concluded

While it is recognised that investment into housing support can be expensive, a growing body of international and Australian evidence suggests that . . . housing support may represent a more cost-effective as well as a more humane approach to the problem of homelessness.

As with other studies, Wood and colleagues found considerable variation between clients in the use of different services. In particular, they focused on 983 clients in five streams identified in the National Partnership Agreement on Homelessness (NPAH). For this group, the key finding was:

The provision of public housing significantly reduces health service use. After entering a public housing tenancy, the proportion of individuals accessing health services fell significantly for tenants in NPAH programs . . . There were significant reductions in people presenting to emergency departments, people staying overnight in hospital, people presenting to ICU, people in psychiatric care, people accessing mental health services and people with prescriptions for opioid dependency treatment.

The average cost of providing support under the NPAH programs examined was estimated as $6,462 per person per year. This is less than half the potential health cost offsets associated with the NPAH programs, of $13,273 per person per year. The research group revisited clients after several years, finding that the benefits continued and even increased where residents stayed in their housing, showing benefits of certainty.

Similar findings were also established in a joint research project between Mission Australia and research teams from the Universities of Western Sydney, Western Australia and New South Wales. The research followed 59 clients over two years, looking at the changes associated with an intensive social support project, termed the MISHA project. This group were often homeless, and as a result had frequent contact with several state government services. Just under half of the ‘baseline’ group (41%) reported spending at least one night in hospital.

That group also had frequent contact with corrections services. Compared with the general NSW population, the baseline group were 4 times more likely to be the victim of assault/robbery, 25 times more likely to be stopped by police, and 6 times more likely to spend a night in prison.
The MISHA social support project was expensive, costing some $14,000 per client per year. However, it produced significant benefits in reducing demand for government services:

In total, the cost of mainstream health, justice and welfare services reduced from $32,254 per participant in the baseline period, to $24,251 per participant in the 24-month follow-up period. This represents a large savings to government of $8,002 per participant per year.

In fact, this summary did not include all the savings. With MISHA support, clients used emergency/crisis accommodation much less – with an average cost reduction of $3,257 per person per year.

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