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

Findings: State government

Cutting funding from the federal SRSS program shifts welfare costs to state government agencies and other service providers

The decision to cut the SRSS support will produce greater demand for the services provided by state governments.

People seeking asylum are eligible for a small range of state government programs not provided at the federal level (though eligibility criteria vary across states and change frequently). For example, the Victorian Government has recently stepped in to provide emergency shelter and relief packages to people seeking asylum who previously had their welfare payments cut.

People seeking asylum in Victoria are also eligible to access 3,000 available Vocational Education and Training (VET) places funded by the state government, as well as the Jobs Victoria Employment Network (now Jobs Victoria Employment Services Mentors) with services delivered by community implementing partners across the state. In New South Wales, the state government funds access to training up to Certificate IV level under the Smart and Skilled program, while the Refugee Employment Support Program (RESP), delivered by the NSW Department of Industry and supported by the AMP Foundation, is open to people seeking asylum living in Western Sydney and Illawarra. In most states, people seeking asylum with no access to Medicare can receive treatment if they present at hospitals’ emergency departments. Western Australia is a notable exception and will charge this group the ‘international’ rate.

Estimating the costs to state government services

As noted above, RCOA has surveyed community organisations providing support for people seeking asylum and other vulnerable migrants, including those accessing SRSS. These organisations overwhelmingly report adverse impacts from the cuts. The organisations estimate that between 75-80% of people cut off from SRSS support are at risk of becoming destitute. If cut from support, they will rely on a range of other services particularly provided by state governments and community-based organisations.

RCOA is not aware of any studies that have investigated the impacts of people seeking asylum moving off Commonwealth benefits, with the subsequent impacts on demand for state governments and NGO services. However, a good indication is available from several studies looking at people moving in the opposite direction, from being homeless into having supported accommodation with associated services. These studies show that homeless people create significant, and costly, demands on services, and that it is significantly cheaper to provide basic support services, such as SRSS.

Even before the changes to the SRSS program, many people seeking asylum were at risk of homelessness. Most SRSS recipients are located in Sydney and Melbourne. With no access to public housing, they face expensive and competitive rental markets. The inadequacy of the SRSS financial assistance payment is evidenced by the large proportion of people seeking asylum who already experience secondary or tertiary homelessness, with many organisations reporting that individuals and families were couch-surfing or living in overcrowded accommodation. One example was that of 12 people living in a two-bedroom apartment. The cuts to SRSS further reduce their ability to cope in the housing market, threatening both destitution and homelessness.

Several recent studies have compared the costs of homelessness with the costs of providing support packages. These studies were conducted by Cameron Parsell and colleagues, David MacKenzie and colleagues, and Lisa Wood and colleagues. One study presented the outcome of the MISHA project, a joint research project between Mission Australia and research teams from the Universities of Western Sydney, Western Australia and New South Wales. All of the researchers looked at the services, especially those offered by the states such as health, homelessness and corrections, used by people when they were homeless compared to when they moved to supported housing.

We present in more detail the key findings of these studies in Appendix 2. In brief, these studies have shown that providing support to a vulnerable group, like the homeless, results in significant cost saving for the states. These savings come from less use of emergency accommodation and health services as well as less demand for police and correction services. The average cost offsets noted in each of the studies are summarised in Table 1 below.

The studies had different study methods, and looked at various groups of people. The variations in cost estimates are therefore not surprising. Nonetheless, the Parsell, MISHA, Wood and MacKenzie studies provide evidence that moving people into accommodation and providing support services have significant cost savings for state governments. The average cost saving across the studies is approximately $20,000 per person per year.

These studies provide good evidence that cutting support services, as the Federal Government is doing with SRSS, will lead to significant increases in service demands, and costs, for state governments and other service providers. The $20,000 additional cost in government services for homeless people provides a useful baseline for estimating the costs from cutting SRSS.

There are three key issues in estimating these costs:

  • All people previously on SRSS are seeking some support services, though the extent of need for such services varies.
  • Only a proportion of people facing SRSS cuts will become homeless, although the numbers are likely to be significant. Indeed, as with general patterns of homelessness, the situation will be dynamic, with people moving in and out of homelessness, and seeking different levels of support.
  • In comparison with the general population, people seeking asylum often require greater and more complex services, which is costlier. This is especially so because of their experience of trauma and often limited English skills.

Despite these uncertainties, the $20,000 average additional annual cost per person for homeless people provides a good basis for cost estimates. We use this baseline to consider two indicative scenarios for the impact of the cuts to SRSS:

  • The high scenario uses the results from RCOA’s interviews with service providers. These suggest that some 75-80% of SRSS recipients will become destitute if their support is cut. The scenario uses an average cost per SRSS recipient of $15,000, 75% of the cost figure for the homeless. As all people affected by the SRSS cuts will seek some services, this suggests that approximately 60% experience some homelessness.
  • A low scenario takes a more conservative approach. This uses an average cost per person of $10,000, half the cost figure for the homeless. This suggests that approximately 40% suffer some homelessness.

Table 2 below examines these two indicative scenarios using the current number of SRSS recipients by states and the number that will be cut from support. The latter is based on the Department’s indication that it will reduce the number of recipients to 5,000 people, a 60% reduction in the number of people who get this support. This does not include the number of people whose applications for SRSS support are not approved and can also face destitution, as this number is not recorded anywhere.

Table 2 indicates that state governments will be facing significant additional costs in health, corrections, and homeless services. These come to between $80 and $120 million a year as a result of the SRSS cuts.

The Department of Home Affairs has not indicated what budget savings it expects to make from the cuts to SRSS. It appears unlikely such savings could be of the size of direct cost impacts for state governments alone in either the high or low-cost scenarios.

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