Final Report on RREF 2001 - Department of Health

FINAL REPORT 

REVIEW OF THE 

RELATIVE RESOURCE EQUITY FORMULA 

IN THE HOME AND COMMUNITY CARE PROGRAM 

IN VICTORIA 

CONSULTANCY REPORT PREPARED BY 

CUMPSTON SARJEANT PTY LTD 

FOR THE DEPARTMENT OF HUMAN SERVICES 

JULY 2001

Abbreviations and Note on Terminology................................................................. i 

Acknowledgements ............................................................................................. iii 

Consultancy Team...............................................................................................iv 

EXECUTIVE SUMMARY ............................................................ V 

PART A: BACKGROUND AND SCOPE OF THE RREF REVIEW ... 1 

Scope of the Review............................................................................................ 1 

HACC Program Objectives and the Resource Allocation Process............................... 3 

The Review process ............................................................................................ 4 

Role of the RREF in the HACC Program ................................................................. 7 

The HACC target population in the current RREF ................................................... 9 

Profile of current users of HACC services..............................................................12 

What revision of the RREF can and cannot achieve ...............................................13 

PART B: DEVELOPMENT OF OPTIONS FOR A REVISED RREF 15 

STEP 1: OPTIONS FOR DEFINING THE RREF BASE 

POPULATION.................................................................... 16 

1.1 Identifying those in need of HACC services ............................................16 

1.2 Prevalence of core activity restriction.....................................................17 

1.3 Population living in the community only .................................................18 

1.4 Adjusting for the frail aged component of the HACC target population......19 

1.5 Other exclusions ..................................................................................22 

1.6 Summary of options for defining the RREF base population .....................24 

1.7 Further issues and preferred options .....................................................25 

1.8 Resolution of options for the RREF base population ................................31 

STEP 2: OPTIONS FOR VARIABLES FOR RECOGNISING 

NEED IN THE RREF........................................................... 32 

2.1 Range and nature of need variables ......................................................32 

2.2 Criteria for assessing variables for inclusion............................................34 

2.3 Assessment of variables .......................................................................35 

2.4 Options for consideration for need variables...........................................38 

2.5 Further issues and preferred options for need variables...........................39 

2.6 Resolution of need variables for inclusion in RREF...................................40 

<strong>Final</strong> <strong>Report</strong> July 2001 

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STEP 3: OPTIONS FOR SCALING NEED VARIABLES.......... 41 

3.1 Need for a standard ruler for different variables .....................................41 

3.2 Options for scaling need variables for inclusion in the RREF.....................42 


3.4 Resolution of scaling of need variables...................................................42 

STEP 4: OPTIONS FOR WEIGHTING NEED VARIABLES.................... 43 

4.1 Weighting of need variables in related formulas......................................43 

4.2 Principal components analysis ...............................................................44 

4.3 Expert advice.......................................................................................44 

4.4 Effects of weighting of variables............................................................45 

4.5 Options for consideration for weighting of need variables........................45 


4.7 Resolution of options for weighting of need variables..............................48 

PROFILES OF NEED VARIABLES ................................................ 49 

Variable 1: Median Household Income - MHHY ....................................................50 

Variable 2: Healthy Years of Life Lost to Disability – YLD ......................................52 

Variable 3: Cultural diversity: % of population in LGA speaking a language other 

than English at home .........................................................................................55 

Variable 4: Koori Population - % of LGA population identifying as Koori .................58 

Variable 5: Accessibility and Remoteness Index for Australia - ARIA ......................61 

PART C: OUTCOMES ............................................................ 64 

STEP 5: OUTCOMES FOR BASE POPULATION OPTIONS AND 

PROJECTIONS ...................................................................... 66 

5.1 Factors affecting outcomes ...................................................................66 

5.2 Options for consideration for Base Populations and Projections ................66 

5.3 Further issues and views on outcomes...................................................67 

5.4 Modeling revised options for Base Populations........................................67 

5.5 Revised outcomes for Base Populations .................................................67 

STEP 6: OUTCOMES OF WEIGHTING FOR NEED VARIABLES ............. 69 

6.1 Method and outcomes reported.............................................................69 

6.2 Options for consideration for weighting of need variables........................69 


6.4 Revised regional outcomes of weighting for need variables......................70 

6.5 Comparison with current RREF..............................................................71 


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6.6 Detailed LGA scaled scores and need weightings ....................................72 

STEP 7: OUTCOMES FOR REGIONAL ALLOCATION OF GROWTH 

FUNDS................................................................................ 72 

7.1 Development of initial and revised RREF options.....................................72 

7.2 Comparison of continuation of current RREF and initial options................74 

7.3 Options for consideration for resource allocations ...................................76 


7.5 Revised outcomes for regional resource allocation ..................................78 

7.6 Assessment of Options .........................................................................79 

PART D: ACHIEVING EQUITY IN THE HACC PROGRAM ........ 82 

REGIONAL AND LOCAL PLANNING FOR HACC .............................. 82 

FUNDING MEASURES COMPLEMENTARY TO THE RREF.................... 83 

RELATIONSHIOP OF GROWTH FUNDS TO HACC BASE FUNDS.......... 85 

FUTURE REVIEW AND ON-GOING DEVELOPMENT OF THE RREF ........ 86 

APPENDIX 1: INPUTS TO THE REVIEW PROCESS ..................... 88 

APPENDIX 1.1: The Review Reference Group .....................................................88 

APPENDIX 1.2: Departmental Steering Committee ..............................................89 

APPENDIX 1.3: Consultation Schedules ...............................................................90 

APPENDIX 1.4: Submissions received.................................................................91 

APPENDIX 2: ABS DISABILITY, AGEING AND CARERS SURVEY..... 92 

Definitions and Frequently Asked Questions ........................................................92 

APPENDIX 3: LGA SCALED SCORES AND TOTAL WEIGHTINGS ON 

NEED VARIABLES ................................................................... 96 

REFERENCES......................................................................... 98 


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ABBREVIATIONS AND NOTE ON TERMINOLOGY 

ABS 

AIHW 

AIP 

ARIA 

CACP 

CDA 

Australian Bureau of Statistics 

Australian Institute of Health and Welfare 

Approval in Principle 

Access/Remoteness Index for Australia 

Community Aged Care Package 

Child Disability Allowance 

DACS Disability, Ageing and Carers Survey, conducted by ABS (1998) 

DALY 

DHAC 

DHS 

DOI 

DSP 

DVA 

EACH 

FAQs 

HACC 

IRSED 

LGA 

MAV 

MHHY 

PACRAM 

PCA 

RREF 

SEIFA 

SES 

Disability Adjusted Life Years 

Department of Health and Aged Care, Commonwealth 

Department of Human Services, Victoria 

Department of Infrastructure, Victoria 

Disability Support Pension 

Department of Veterans’ Affairs 

Extended Aged Care at Home (service package) 

Frequently Asked Questions, regarding Disability, Ageing and Carers 

Survey (Appendix 2) 

Home and Community Care Program 

Index of Relative Socio-Economic Disadvantage 

Local Government Area 

Municipal Association of Victoria 

Median Household Income 

Post Acute Care Resource Allocation Model 

Principal components analysis 

Relative Resource Equity Formula 

Socio-Economic Indexes for Australia 

Socio-Economic Status 

VHC Veterans’ Home Care Program commenced 2001. 

YLD 

Healthy Years of Life Lost to Disability 


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Abbreviations and notes on Terminology 

The term Koori is used in this report for the indigenous population of Victoria, in line with 

Victorian Government policy. It was pointed out in the Consultations that there are members of 

other indigenous peoples living in Victoria, and this total indigenous population is covered in 

references to the Koori population. A profile of the distribution of the Koori population is given 

in Part B. 

The term handicap is used as a technical term to refer to levels of handicap as defined in the 

ABS Disability, Ageing and Carers Survey. Handicap is synonymous with core activity 

restriction. For full definitions see Appendix 2. 


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ACKNOWLEDGEMENTS 

An exercise as extensive as this Review of the Relative Resource Equity Review in the HACC 

Program can only be undertaken with the cooperation of many different organisations and 

individuals. 

The Consultancy Team would like to acknowledge the contribution of all those who participated 

in the consultations. Attending the consultations in all regions provided us with a first hand 

view of the diversity of needs to which HACC services have to respond and it was especially 

heartening to see the value that all participants placed on having a resource allocation formula 

that was fair and transparent. 

Our appreciation also goes to the members of the Reference Group who helped us distil the key 

issues for the Review, and our special thanks go to Ms Patricia Reeve who ably chaired the 

Reference Group. 

Our liaison with the provider and consumer groups involved in the HACC Program across the 

Victoria was facilitated by the efforts of staff of the Department of Human Services. The keen 

interest of officers of the Aged, Community and Mental Health Division, particularly Jeannine 

Jacobson, Alexandra Hurley, Jeremy Maddox and Carol Pyke, was evident throughout the 

Review. Working with these officers and staff from other Divisions and Regional Offices who 

were members of the Departmental Steering Committee has made the RREF Review very much 

a joint venture. 

As leader of the Consultancy consortium, I would like to thank my colleagues for their hard 

work and team spirit. I am sure that each member of the team would join in thanking the others 

for the particular contributions they made to the overall task: 

Liz Lowe and Ro Saxon, from HDG Consulting Group, for the outstanding 

organisational and presentation skills they brought to the Consultations; 

Richard Rosewarne and Hugh Sarjeant, for the many hours of critical discussion 

and review of draft reports, as well as their high level analytic skills; and 

Diana Droog, for her smooth and efficient management of the Consultancy from 

beginning to end. 

Discussions among the members of the consultancy team and with all those involved in the 

Review prompted a vast range of questions about the RREF and the HACC program more 

widely. We hope that the answers and options that we have come up with, through consultation 

with the field, exhaustive analyses of data, and assessment of a variety of other background 

information, will advance the achievement of the goals of the HACC program in Victoria. 

Anna Howe 

May 11th, 2001 


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CONSULTANCY TEAM 

The Department of Human Services commissioned Cumpston Sarjeant Pty Ltd. to undertake the 

consultancy for the RREF Review. The consultancy team was: 

Anna Howe, PhD, Independent Consultant Gerontologist 

Richard Rosewarne, PhD, Applied Aged Care Solutions Pty Ltd 

Hugh Sarjeant, Consulting Actuary, Cumpston Sarjeant Pty Ltd 

Diana Droog, Business Manager, Cumpston Sarjeant Pty Ltd 

Liz Lowe, HDG Consulting Group 

Ro Saxon, HDG Consulting Group 


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EXECUTIVE SUMMARY 

The Review of the Relative Resource Equity Formula for the HACC Program was announced 

by the Victorian Minister for Housing and Aged Care, the Hon. Bronwyn Pike, in May 2000. 

The purpose of the Review was to examine the ways in which the formula contributed to the 

achievement of equity of resource allocation in the HACC Program across the nine Department 

of Human Services regions in Victoria. 

The RREF is the formula that has been used in the HACC program since 1992 to distribute 

annual growth funds and to bring about adjustments in base funding to achieve equitable 

funding for the target population in each region. The HACC target population has been defined 

by the Commonwealth and States on the basis of the population with moderate, severe and 

profound levels of core activity restriction, as measured in the most recent Disability, Ageing 

and Carers Survey conducted by the by the Australian Bureau of Statistics in 1998. To date, the 

only other need factor for HACC services recognised in the RREF has been for rurality. This 

failure to take account of the range of other factors potentially affecting the need for HACC 

services was seen as limiting the effectiveness of the RREF as a mechanism for equitable 

resource allocation. 

The Review process involved investigation of a range of policy and program material and 

background literature, extensive analysis of statistical data and modelling, and preparation of a 

Consultation Paper and Options Paper to provide background information for two rounds of 

consultations. Consultation sessions were held in all nine regions across the state, and 

additional consultations were held with Koori groups. Some 200 participants attended each 

round of consultations, representing HACC provider and consumer organisations. Issues raised 

in each round were taken into account in subsequent stages of the Review. 

The consultations identified a wide range of shortcomings with the current RREF and critical 

areas for attention. There was strong support for revision of the RREF and the second round of 

consultations canvassed options for the five main elements of the RREF - the base population; 

the need variables to be included; and the scaling, weighting and number of variables. 

Outcomes of revised RREF models were presented in terms of regional shares of growth funds 

and preferences among the range of options for the elements of the RREF were assessed. The 

options put forward for revision of the RREF were seen to have addressed the major limitations 

of the current formula. The initial outcomes reported in the Options Paper have been revised to 

take account of the rating of options and other issues identified in the second round of 

consultations and a new set of revised outcomes are presented in this <strong>Report</strong>. The revisions to 

the RREF were widely accepted as providing a more equitable mechanism for resource 

allocation, and recognition of this improvement is a key consideration in adopting a revised 

RREF. 

The shares of growth funds allocated to regions under the revised models show only relatively 

small shifts from the shares that would be received under continuation of the current RREF. 

The options for a revised RREF have been built up from data at Local Government Area level, 

and the analysis of these data has shown that the degree of variation in need between LGAs in 

each region is at least as great as differences in average need levels between regions. As the 

RREF only allocates resources at the inter-regional level, addressing these marked variations in 

need within regions is identified as a priority for regional and local planning. The relationship 

between regional shares of growth funds and base funds was also raised in the context of any 

new RREF. The current RREF includes provision for identification of separate funding for an 

equity adjustment to base funding and this option remains in any revised RREF. 


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Executive Summary 

The RREF is recognised as one of several measures through which equity in the HACC 

Program is pursued. The consultations raised a number of wider issues that have an impact on 

equity of outcomes in service delivery and which need to be addressed in conjunction with 

implementation of a revised RREF. 

This <strong>Final</strong> <strong>Report</strong> draws together material from the Consultation Paper and Options paper, 

together with reports on the Consultations and a range of other material, and incorporates the 

modelling of revised outcomes. The structure of the <strong>Report</strong> follows the processes of the 

Review: 

Part A sets out the scope and background to the Review 

Part B covers the development of options for the RREF in four steps: 

Step 1: Options for definition of the base population 

Step 2: Options for variables for weighting the RREF to take account of need 

Step 3: Options for scaling of variables 

Step 4: Options for adjusting the weighting of need variables. 

Part C reports the outcomes of modelling the options for the RREF in three steps: 

Step 5: Outcomes for base populations 

Step 6: Regional outcomes of weighting for need variables 

Step 7: Outcomes for regional allocation of growth funds 

Part D takes up a range of other issues that have a bearing on the achievement of equity 

in HACC through the RREF and identifies options for inclusion in the strategy 

for implementation of any revised RREF. 

The Terms of Reference provide a framework for summarising the 

conclusions of the Review: 

1. The objectives of the HACC program 

As set out in the current HACC Agreement, the objective of the HACC program of central 

relevance to the review of the RREF is that the program should “ensure that, within available 

resources and within the broader service network, services are provided equitably between 

regions, responsive to the regional differences and targeted to those who would benefit most 

and/or are most in need of these services”. The Victorian Government is committed to the 

objectives of the HACC Program and its continued growth and has made significant 

contributions of State only funds which are yet to be matched by the Commonwealth. The way 

in which the current RREF works and the progress towards achieving equity in resource 

allocation that has been achieved to date are reviewed in Part A of this <strong>Report</strong>. 

Against this equity objective, the main shortcoming of the current RREF was seen to be its 

failure to take account of the range of factors that affect need for HACC services, and that the 

resultant allocation of resources fails to respond to regional needs. The development of a 

revised RREF that included a base population that better reflected the target population and a 

range of need variables was strongly supported in the consultations and the options 

subsequently put forward were widely accepted as providing a more equitable basis for 

allocation of resources. The outcomes for regional resource allocations were seen to respond to 

differences in relative need, notwithstanding the limits of the absolute level of resources 

available to the program. While options that favoured their region were obviously preferred by 

participants in the second round of consultations, there was ready acknowledgement of the 

wider principle of equity and that the RREF should express this principle. 


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All regions will continue to receive growth funds under a revised RREF and reallocations 

between regions compared to outcomes under continuation of the current RREF are relatively 

minor. Further, modelling of reallocations showed a mixed pattern across rural and 

metropolitan regions rather than a simple rural-metropolitan divide. 

The much larger populations of the metropolitan regions meant that most reallocation was 

between the metropolitan regions. Outcomes for rural regions generally resulted in lower levels 

of growth funding, in part reflecting population trends. It was also argued that the allocation of 

resources through the RREF alone failed to take account of factors that increased the cost of 

service delivery in rural areas and that higher performance targets associated with RREF 

allocations could impose additional burdens on rural regions. Supplementary measures that 

could recognise these rural cost factors are taken up under Term of Reference 5 below. 

Adoption of a revised RREF would change the level of per capita funding that defined equity 

and so redraw the equity line for the base funding that each region received. Recognising that 

reallocation of growth funds would bring about adjustments in the base funding only very 

slowly, the relationship between growth funding and base funding was raised in the Round 2 

Consultations. 

2. The national context for resource allocation in aged care and 

Commonwealth planning processes 

The RREF Review has been undertaken in the context of continuing debate about the 

Commonwealth strategy for equalisation of HACC funding per capita of the target population. 

The Review has identified a number of issues that the Victorian Government needs to take up 

with other States and the Commonwealth, including: 

• The options developed for operationalising the definition of the HACC target 

population; 

• The contribution of the RREF Review to the development of resource allocation 

formulas in other states with a view to maintaining national consistency; and 

• The need for continuing liaison with the ABS with regard to optimising the value of 

the next Survey of Disability, Ageing and Carers for the HACC program and related 

programs. 

3. The basis on which the target population for HACC services is 

measured 

Step 1 in developing options for a revised RREF focused on alternative approaches to defining 

the HACC target population and these issues and the options that emerged are presented in Part 

B: Step 1 of this <strong>Report</strong>. 

The main basis for the definition of the target population as adopted in HACC nationally is the 

population identified as having moderate, severe or profound activity restrictions in the 1998 

ABS Survey of Disability, Ageing and Carers. The Review addressed a number of concerns 

expressed in the field about this data and noted several strengths of the DAC survey that make it 

the most appropriate base for measuring the HACC target population. 


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The adjustment for the frail aged in the current RREF was seen to be inadequate and two 

options were proposed involving (1) inclusion of the total population aged 70 and over living in 

the community and (2) doubling the 70+ population with core activity restrictions. Options for 

other adjustment in the base population were proposed in relation to exclusion of the population 

in residential aged care and disability accommodation. 

There was considerable debate as to how the veteran population eligible for the new DVA 

Veterans’ Home Care Program should be treated. While a number of practical issues were 

raised about the early implementation of the VHC Program, the level of additional resources 

provided through the program is close to the level of growth funds and hence of considerable 

relevance to the function of the RREF as a resource allocation tool. Accordingly, the veteran 

population eligible for the VHC was discounted on the basis of an alternative source of funding 

being available. 

4. The factors which should be taken into account to achieve equity 

across Victorian Regions in the distribution of HACC resources and the 

methodology which should be used to apply those factors 

The main shortcoming of the RREF was seen to be the lack of attention to variables affecting 

need for HACC services, and a wide array of need factors were proposed in the consultations. 

Assessment of these variables for inclusion in the RREF is presented in Part B: Step 2 of this 

<strong>Report</strong>. Profiles of the five variables selected as need indicators are presented at the end of Part 

B. All of the 29 variables identified in the consultations were assessed; seven have been taken 

into account in defining the base population and five are proposed as need variables for 

weighting the RREF, with the remaining variables being set aside as being duplicative or on 

other grounds such as lack of reliable data. The five variables preferred as indicators of need for 

HACC services are: 

1. Socio-economic status: median household income 

2. Health status indicator: healthy years of life lost to disability 

3. Cultural diversity: population speaking a language other than English at home 

4. Koori population 

5. Rurality: Accessibility/Remoteness Index for Australia (ARIA) 

Replacement of the variable initially considered for health status - life expectancy - with the 

measure of healthy years of life lost to disability was informed by the DHS Burden of Disease 

study and is significant as potentially the first application of the results of this study in service 

planning. There was also extensive discussion of the impact of the shortfall of Commonwealth 

funded residential care places on HACC, and how this impact might be recognised in the RREF. 

The decision to exclude this variable was made on resource grounds, consistent with the 

decision on veterans eligible for VHC, namely that Commonwealth funding for the residential 

care program should cover the shortfall rather than HACC. 

All data on the base population and need variables were assembled at the LGA level and 

regional models built up from the local level. Detailed consideration was given to whether any 

of the need variables should be given additional weighting and to the number of variables to be 

included in a revised RREF. A wide range of options was initially modelled and revised models 

developed with all five of the need variables are seen to capture the main dimensions of need in 

a formula that retained a high degree of transparency. With regard to weighting, the need 

variables make different contributions to the overall need weighting, reflecting their distribution 

across LGAs, but in order to demonstrate the impact of adjusting the weighting of different 

variables, options were modelled with double weighting of selected variables. The outcome of 

this adjustment was to increase the effect of the selected variables. 


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Beyond the detailed consideration that was given to how the Koori population should be scaled 

as a need variable, it was recognised that including the Koori population as a need variable in 

the RREF did not guarantee that the goal of better access or more appropriate services would 

automatically result, and that other complementary strategies would be required by way of 

continuing Service Development Grants. 

The particular problems faced by agencies serving Koori populations included the need to 

operate across LGA and even regional boundaries in some cases. Similarly, recognition of 

cultural and linguistic diversity as a need variable in the RREF could add to the level of 

resources allocated to regions with large numbers in these populations, but did not address the 

nature of services required or the additional costs of service delivery associated with use of 

interpreter services. Again, Service Development Grants were seen as a means of addressing 

these issues. 

5. The most effective approach to recognising the needs of rural LGAs 

The needs of rural areas were raised at all stages of the Review and are considered throughout 

the <strong>Final</strong> <strong>Report</strong>. 

Under the options developed for a revised RREF, with all LGAs weighted on the same need 

variables, need weightings show a wide range of need across both rural and metropolitan LGAs 

rather than a simple rural-urban divide. While rural regions still achieved weightings of at least 

30%, the relativity of these weightings has changed as metropolitan regions also receive need 

weightings. The need weightings apply to only small populations in some rural LGAs and other 

population trends also affect the outcomes of the RREF. 

At an early stage in the Review, it was widely argued that other measures needed to be taken to 

address the higher costs of service delivery in rural areas as performance targets attached to 

current RREF allocations failed to do so, and rather increased the performance targets that had 

to be reached. The detailed analysis of need factors across all regions has provided a sounder 

basis for need weightings in the RREF, and any revision of the unit cost structure in HACC and 

development of related pricing mechanisms needs to be informed by a similarly detailed 

investigation of the factors contributing to cost variations, and the extent of those variations 

across all LGAs. 

Within rural areas differences between the cost of serving clients living in major rural centres 

and towns compared to those who were more distant were recognised, and 

mechanismsaddressing the cost of travel in rural areas need to be specifically targeted to these 

“distant” clients. The need for any measures taken to address rural needs in HACC to be 

consistent with approaches to rural services taken in other DHS programs was also emphasised. 

Uneven access to services that were funded on a region-wide basis also need to be addressed 

through planning measures as well as through resource allocation. 

6. The impact of capacity to raise fees on regional resource allocation 

There was unanimous agreement from the beginning of the Review that the RREF should not 

attempt to take direct account of capacity to raise fees for HACC services. Rather, it was 

considered that this factor should be dealt with indirectly through inclusion of a socio-economic 

status variable in the RREF. 


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While a number of options were considered, including variables based on take-up of age and 

disability support pensions; median household income was identified as the most appropriate 

and robust variable. This socio-economic status variable makes the greatest contribution to 

need weighting in the RREF model, and remains dominant even in models which make 

adjustments to the weightings of other variables. Notwithstanding the close relationship 

between socio-economic status and health status, it was considered more appropriate to include 

separate variables to capture the somewhat different nature of these two dimensions of need 

than to give added weight to the socio-economic variable and exclude the health status variable. 

7. The basis on which judgements should be made in allocating 

resources between LGAs within regions; and 

8. The relationship to local area planning and needs analysis 

These Terms of Reference both relate to planning and allocation of the resources that the RREF 

allocates on a regional level. There was a widespread view that more consistent and systematic 

approaches to resource allocation and service development across all DHS regions was needed 

to achieve equity within regions. While planning approaches that were seen to be effective in 

some regions may have wider applicability, it also has to be recognised that each region faces a 

different pattern of need and a different configuration of existing services. The field was aware 

that DHS is currently addressing issues of regional and local planning in HACC, and there was 

strong support for progressing HACC planning in conjunction with implementation of a revised 


The analysis of need variables carried out in the Review provided considerable insight into the 

level and nature of variations in total need weightings for LGAs within any one region. This 

LGA level data was of considerable interest to the field and access to this type of data was seen 

to have a very useful contribution to make to regional planning. At the same time, these data 

did not provide a basis for allocating resources to a local level within regions, but needed to be 

complemented with a range of other service provision data and local knowledge. The lack of 

consistent data on service provision at local and regional level was recognised and the HACC 

Minimum Data Set was seen as the means for addressing this problem. Primary Care 

Partnerships and the Memorandum of Understanding between DHS and the Municipal 

Association of Victoria provide vehicles for exchange of information and discussion at subregional 

and local level, and issues such as uneven access to Work to this end is currently 

underway in DHS. 

In considering approaches to planning and resource allocation at the regional and local level, it 

is important to remember that the annual growth funds only add marginally to existing 

resources. As by far the major part of resources are bound up in existing services, planning and 

service development needs to give at least as much attention to existing services as to new 

service development and to use growth funds as a catalyst to adjusting existing services to 

respond to changing needs. 


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9. The planning and resource allocation methodologies used by 

community support programs which delivery similar services to HACC 

in Victoria; 

10. The DHS Aged Community and Mental Health Division’s funding 

reform project; and 

11. Methodologies used for these purposes in other states 

These Terms of Reference can be considered together. An analysis was made of a number of 

other resource allocation formula used in Victoria and the variables included and methods of 

construction were taken into account in developing options for the RREF. The major 

consideration in relation to other programs is not so much the difference between resource 

allocation formulas, but between major programs for which resources are allocated on the basis 

of a known formula and small programs in which resources appear to be allocated without the 

benefit of a formula. The processes of the RREF Review and acceptance of a revised RREF 

should inform discussion about more systematic resource allocation and planning in such 

programs in the context of the funding reform project underway in Aged, Community and 

Mental Health Division in DHS. 

No other states were found to have a developed mechanism for allocating HACC resources and 

it is rather the review of the RREF that has attracted interstate and Commonwealth attention. 

The operation of the high care pool by the NSW Home Care Service was canvassed and some 

interest expressed in a similar option for Victoria but any such option will be more appropriately 

pursued through HACC assessment and targeting strategies. 

In conclusion, the purpose of this <strong>Report</strong> is to present a number of options and preferences 

identified in the consultations and provide a basis on which the Minister for Housing and Aged 

Care can make an informed decision on the mechanism for regional resource allocation in the 

HACC Program in Victoria, in the context of relevant budget and policy developments. 


xi

Summary of Options for a revised RREF 

Step 1: 

Base Population 

Options 

Step 2: 

Need Variables 

Step 3: 

Scaling of Variables 

Step 4: 

Weighting of 

Variables 

Outcomes 

Step 5: 

Base Populations 

Step 6: 

Regional Outcomes of 

Weighting for Need 

Variables 

Step 7: 

Regional Allocation of 

Growth Funds 

Implementation 

Options 

Round One Consultations 

3 options prepared with 

different adjustments for the 

frail aged and the same 

adjustments for other 

elements 

28 variables identified and 

assessed 

7 taken into account in 

development of base 

population 

5 to be included in revised 


All variables scaled 0-9 on 

basis of decile distribution of 

values for each variable 

across all 78 LGAs 

Variables made differing 

contributions to model, 

reflecting distribution of 

scores across LGAs 

Models with and without 

adjustments to weightings 

4 and 6 variable options 

initially developed 

Initial outcomes reported in 

Options Paper prepared for 

basis of Round 2 

Consultations 

Range of issues raised in 

consultations 

Round Two Consultations 

Revised models developed for two base 

populations: 

! Base 2: includes total population aged 70+, 

living in the community 

! Base 3: double weighting to the population 

aged 70+, with core activity restrictions 

5 need indicators 

! Socio-economic status: median household 

income 

! Health status indicator: healthy years of life 

lost to disability 

! Cultural diversity: population speaking a 

language other than English at home 

! Koori population 

! Rurality: Accessibility/Remoteness Index for 

Australia (ARIA) 

Scaling 0-9, with 0 representing low need and 9 

representing high need 

Revised models prepared with and without 

adjustments to weightings 

5 variable model seen as including sufficient 

range of variables and maintaining transparency 

Revised Outcomes presented in <strong>Final</strong> <strong>Report</strong> 

Implementation strategy for revised RREF also 

needs to give attention to: 

! costs of delivery of services to distant 

clients in rural regions; 

! continuing service development grants to 

address special needs of the Koori 

population and cultural and linguistic 

diversity; 

! Enhanced consistency in regional 

planning arrangements, and improved 

access to data at LGA level 

! Continuing investigation of critical issues 

for the HACC program, 

! Remaining inequities in base funds; and 

! Future updating and review of a revised 



xii

PART A: BACKGROUND AND SCOPE OF THE RREF 

REVIEW 

SCOPE OF THE REVIEW 

Terms of Reference 

The purpose of the Review of the Relative Resource Equity Formula, or RREF, used in the 

Home and Community Care Program in Victoria is to provide advice to Victoria’s Minister for 

Housing and Aged Care on options for improving the RREF as the means for distributing 

HACC growth funds to the nine Department of Human Services regions. The RREF is the 

resource allocation formula used to ensure that, over time, funds in the HACC Program are 

distributed equitably across the nine regions in the State. 

The Terms of Reference of the Review are to take account of: 

1. The objectives of the HACC program; 

2. The national context for resource allocation in aged care and Commonwealth 

planning processes; 

3. The basis on which the target population for HACC services is measured; 

4. The factors which should be taken into account to achieve equity across 

Victorian Regions in the distribution of HACC resources, for example socioeconomic 

status, health status, cultural and linguistic diversity and geographic 

factors such as remoteness, and the methodology which should be used to 

apply those factors; 

5. The most effective approach to recognising the needs of rural LGAs; 

6. The impact of capacity to raise fees on regional resource allocation; 

7. The basis on which judgements should be made in allocating resources 

between LGAs within regions; 

8. The relationship to local area planning and needs analysis; 

9. The planning and resource allocation methodologies used by community 

support programs which delivery similar services to HACC in Victoria; 

10. The DHS Aged Community and Mental Health Division’s funding reform 

project; and 

11. Methodologies used for these purposes in other states. 

These terms of reference express the concerns that have arisen in the context of the State 

government’s concern to expand the HACC Program in Victoria, and to achieve equity in the 

allocation of growth funds through the RREF, and to respond to issues raised by provider and 

consumer groups about the effectiveness of the current RREF in pursuing these goals. 

<strong>Final</strong> <strong>Report</strong> July 2001 1

Expanding the HACC Program in Victoria 

Part A: Background and Scope of the RREF Review 

The Victorian Government is committed to continued growth in the HACC Program. In 2000- 

01, as well as matching the Commonwealth’s offer of $8.33 million growth with an allocation 

of $5.4 million, the State has allocated an additional $6.0 million for the expansion of adult day 

groups and core HACC services. They will grow to $8.0 million in extra funds for 2001-02. 

This is in addition to extra funding provided for home care services for post acute hospital 

patients (Hospital to Home Program). A matching commitment has been sought from the 

Commonwealth, but so far without success. 

In the context of national resource allocation, the Victorian Government is also concerned that 

Victoria is below the national average for Commonwealth-funded aged residential care services 

Productivity Commission, 2000). The Commonwealth’s national HACC equalisation strategy 

aims to ensure that there is equal per capita funding for HACC services across Australia by 

2010-2011 by adjusting growth funds to each State and Territory each year. Victoria has been 

relatively well funded for HACC compared with other States and Territories and therefore 

receives a lower proportion of growth funds each year. This equalisation strategy does not, 

however, take account of Victoria’s relatively under funded position compared with other States 

and Territories, in Commonwealth funded residential aged care which in turn puts substantial 

pressure on HACC services. 

The Victorian Government is committed to strengthening its partnership with the range of 

HACC service providers; one significant feature of the Program in Victoria has been the 

substantial financial contribution to HACC services made by local government authorities. 

The RREF applies to HACC growth funds 

The Review is focused on the way in which the annual HACC growth funds are distributed to 

the nine DHS Regions. Growth funds for Linkages projects within HACC are now included in 

the total growth funds distributed through the RREF. The growth funds available for 2000-2001 

were $19.7 million. Under the Commonwealth’s national equalisation formula, growth in 

Victoria is expected to continue at 5 to 6 % per annum. Because each year’s growth is 

incorporated into the base funding for the next year, the cumulative effect is quite considerable. 

An annual growth rate of this order results in an overall increase of around 30 % by the fifth 

year. 

Equity in distribution of growth funds 

The State Government is concerned to ensure that HACC growth funds are distributed equitably 

in relation to need. 

For the purposes of the current RREF, equity is defined as: 

• the distribution of funds in relation to need; 

• need is in turn defined by the distribution of the HACC target population; 

and 

• the operational definition of the HACC target population is the distribution of 

the population with moderate, severe and profound handicap, as measured 

by the ABS Survey of Disability, Ageing, and Carers. 



Over the last eight years, HACC growth funds have been allocated to regions on the basis of the 

RREF. Over that time, the RREF has achieved a significantly greater degree of equity in 

resource distribution in relation to the distribution of the HACC target population between DHS 

regions. In the last two years, some providers have raised questions as to whether the RREF, as 

it is currently structured and applied, is the most effective method for advancing equity in the 

distribution of HACC resources. It is these concerns that have prompted the Victorian 

Government to undertake the present review. 

It was beyond the scope of the Review to consider the adequacy of the total level of HACC 

funding. As noted, the Victorian Government is committed to increasing HACC funds and is 

negotiating with the Commonwealth over the level of matching funds. Any additional funds 

that become available will be distributed through a process focused on achieving equity in 

relation to need. 

HACC PROGRAM OBJECTIVES AND THE RESOURCE ALLOCATION 

PROCESS 

This section of the Paper provides a brief background to the way in which the RREF Review fits 

into developments in the HACC Program at national and state level. 

National goals of the HACC Program 

The broad goals of the HACC Program are stated in the current HACC Agreement. 

They make reference to: 

1. Promoting the provision of a comprehensive, co-ordinated and integrated 

range of basic support and maintenance services for frail older people and 

younger people with disabilities and their carers, to enhance their 

independence in the community and prevent premature or inappropriate 

admission to long term residential care; 

2. Ensuring effective planning, monitoring and accountability and facilitating 

input from consumers; 

3. Ensuring that within available resources, services are delivered in a manner 

which is cost effective, achieves integration, promotes independence and 

avoids duplication; 

4. Ensuring that, within available resources and within the broader service 

network, services are provided equitably between regions, responsive to 

regional differences and targeted to those who would benefit most and/or 

are most in need of these services; 

5. Promoting an integrated and co-ordinated approach between delivery of 

home and community care and related health and welfare programs, 

including programs providing residential care; and 

6. Expanding and developing high quality home and community services 

through the joint co-operation of the Commonwealth, State/Territory, Local 

Governments and the community sectors. 



The Victorian RREF is a major mechanism for pursuing the fourth objective, but it is not the 

only mechanism shaping resource allocation. HACC funding in Victoria and in other states 

occurs within the wider context of planning, delivery and accountability, and draws on a range 

of other tools, including extensive consultation. 

The national HACC equalisation strategy 

The national budget for the HACC Program is divided among the States and Territories by a 

resource equalisation formula similar to the RREF. Funds appropriated by the Commonwealth 

are distributed between the States on the basis of each State’s share of the national program’s 

target population with an underlying objective of equalizing HACC expenditure per capita 

across Australia. Commonwealth funds are then matched in a roughly 60/40 ratio by each State. 

In the last few years, the national target population has been calculated from data from the 1993 

Survey of Disability, Ageing and Carers, carried out by the ABS. Discussions are currently 

underway among Commonwealth and State/Territory HACC officials on options for revising or 

updating the national formula. 

Regional HACC planning process in Victoria 

Since the 1995 Efficiency and Effectiveness Review, considerable progress has been made by 

the Commonwealth and States in the development of regional planning frameworks, based on 

the program’s output indicators. Nationally, the Commonwealth sponsored the development of 

a computer-based Service Provision Targets Framework which has been used by State 

administering authorities since 1997 to help achieve more equity in service outputs. 

Victoria’s Department of Human Services has adapted this system, creating a ‘HACC Planning 

Tool’ using Excel spreadsheets. Once a region has been allocated its share of growth funds the 

DHS regional planners use the HACC Planning Tool to decide how to allocate the funds across 

the range of service providers and service types. Regional staff also arranged consultations with 

consumer and provider groups as part of this process. The aim is to achieve greater equity and 

comprehensiveness in the range of HACC service types across LGAs. In this context, ‘equity’ 

is measured in terms of the number of hours of each service type available per thousand people 

in the HACC Target Population, as defined for use in the RREF. 

THE REVIEW PROCESS 

Timetable 

The Review was announced in May 2000 and the Consultancy Team engaged to undertake the 

review the RREF commenced in October 2000. The first round of Consultations were held in 

late November and early December 2000 and the second round in March and April 2001. 

Consultation 

Reference Group and Steering Group 

The Review drew on inputs from a wide range of sources and was supported by a Reference 

Group comprising some 20 provider and consumer groups, as detailed in Appendix 1.1, and an 

internal DHS Steering Committee that included representatives of Regional Offices, as detailed 

in Appendix 1.2 



Consultation Paper 

A Consultation Paper was prepared as a basis for the first round of and as a guide for those 

making written submissions to the Review. The audience for the paper was all those involved 

in the HACC program, whether as actual or potential clients, carers, consumer organisations, 

providers and/or administrators. 

The Consultation Paper aimed to promote discussion of the role of the resource allocation 

formula as an integral part of the HACC program. It set out the issues raised in the Terms of 

Reference and posed 14 questions for discussion. The questions were not exhaustive and it was 

expected that further issues would be raised in the consultations and submissions. The 

Consultation Paper made reference to some issues that were also being addressed in the 

concurrent consultations on the report Targeting in the Home and Community Care Program 

(Howe and Gray, 1998), and separate consultations on that report were held following the RREF 

consultations. 

Round 1 Consultations and Submissions 

The Consultation Paper was widely distributed directly and via the DHS web site prior to the 

first round of consultations which were held in late November and early December 2000. 

Consultations were held in each of the nine DHS regions across Victoria, four in metropolitan 

areas and five in rural areas. Additional consultations were also held in Mildura and Geelong 

because of the geographic extent of the respective regions, and with indigenous groups. The 

Schedule of Consultations is at Appendix 1.3. 

Some 200 individuals attended the consultations, representing 140 service providers and 

consumer representative organisations: 

• 35% were from Local Government; 

• 30% were from health related agencies such as ACAS and Community Health 

Centres; 

• other community service agencies involved in HACC and related programs, 

including ethnic organisations: Vision Australia, Uniting Care Victoria, Salvation 

Army, Baptist Community Care, Jewish Community Services, Australian Polish 

Community Services, Gippsland and East Gippsland Aboriginal Co-operative Ltd., 

Chinese Community Social Services Centre, Greek Welfare Centre (Fairfield), 

Palliative Care Victoria, Association of Supportive Care Homes, Migrant Resource 

Centre (Mitcham); 

• smaller numbers of HACC providers specifically from the disability sector, 

including Community Connections (Warrnambool), Interchange (Central Gippsland 

and Loddon- Mallee), Victorian Brain Injury Recovery Centre, Bright Industries; 

• consumer groups, including Carers Victoria, Motor Neurone Disease Association; 

and 

• Commonwealth Government Departments, DHAC, DVA. 



A total of 32 submissions were received, as listed in Appendix 1.4: 

• the majority were from Local Government, eight from individual Councils, two 

from groups of Councils and local community health services, and the Municipal 

Association of Victoria; 

• two were from major aged and community care providers that covered several 

regions, the Royal District Nursing Service, the largest single HACC agency in 

Victoria, and Uniting Care; 

• two were from health services, namely Barwon Health and the Children’s Hospital; 

• four were from organisations representing different client groups, including younger 

people with disabilities and ethnic communities. 

Following presentation of a full report on the Consultations to the Reference Group, a summary 

feed-back report was circulated in early 2001 to all who attended or who made submission 

Options Paper 

Following the first round of consultations and other research and development work by the 

Consultancy team, an Options Paper was prepared as a basis for the second round of 

consultations. The Options Paper was distributed to all HACC agencies and to all those who 

participated in the first round of consultations including through regional DHS offices and via 

the DHS web site. 

To provide a guide for the second round of consultations, the Options Paper followed the 

following steps: 

• it outlined the options available at each step; 

• it noted the criteria to be considered in deciding between options; 

• it showed profiles of the variables identified for weighting the RREF base 

populations; 

• it presented RREF base populations and outcomes taking account of different 

options; and 

• it sought feedback on each step of the development of the options for the revised 


Each step ended with a summary of the options developed and questions for discussion at the 

Consultations. It was emphasised that none of the options presented in the Options Paper had 

been identified as preferred options for the revised RREF, and that the final revised RREF 

would only emerge after the second round of consultations. The options presented in the 

consultations and the further issues identified are reported in Part C and Part D of this report. 



Round 2 Consultations 

The second round of consultations was held in late March and early April 2001. Again, 

consultations were held in all nine regions and in Mildura and Geelong, as per the schedule at 

Appendix 1.3. A further consultation was also held with indigenous groups 

Almost 200 individuals from 148 organisations attended. A similar range of agencies was 

represented as at the first round of consultations 

To assist in recording views on issues and options presented at the Round 2 Consultations, 

participants were provided with a response sheet. Just on half of all the participants returned a 

completed response at the consultation or subsequently and a tally of the responses was made to 

provide a summary account of the views expressed. 

<strong>Final</strong> <strong>Report</strong> 

Information gathered from the consultations and submissions was drawn on extensively as the 

Review progressed and is incorporated in the later sections of this <strong>Report</strong>. This <strong>Final</strong> <strong>Report</strong> 

also draws on the material presented in the Consultation Paper and Options Paper. 

ROLE OF THE RREF IN THE HACC PROGRAM 

How the current RREF allocates growth funds to regions 

The RREF was introduced in 1992 as a mechanism for allocating the additional resources made 

available as HACC growth funds each year to the nine DHS regions on an equitable basis. To 

this end, the RREF is used to measure the share of resources currently allocated to the nine DHS 

regions against an ‘equity’ distribution in which any region would receive the same number of 

dollars per person in the Target Population. Where any region is more than 5 % below ‘equity’, 

some of the annual growth funds are set aside for a special allocation to these under-funded 

regions to bring them closer to the statewide equity level of funding. 

The remaining growth funds are then allocated to all regions in accord with each region’s 

proportion of the State’s total Target Population. The size of each regional HACC Target 

Population is built up from estimates of the HACC Target Population in each LGA. 

An example of how the RREF works at the LGA and regional level is presented in the box over. 

Equity outcomes achieved 1995-96 to 1999-2000 

An equitable distribution of HACC resources is achieved when all members of the HACC target 

population in all regions receive the same per capita dollar funding. Each region’s share of the 

State’s total HACC funding would then be equal to its share of the total State target population. 

Regional deviations from equity are shown in the graph below. The bars in the graph show the 

percentage difference between the actual level of funding received and the amount that would 

be received if each region was funded at the statewide per capita level. 



Figure 1 shows that considerable progress towards equity as defined by the current RREF has 

been made over time: 

• In 1995-96, three regions were 15% above equity, one was 14% below, and only 

three were within 5% of equity. 

• By 1999-2000, seven regions were within 2.5% above or below equity, a 5% 

variation overall, and the other two regions were only 3% and 5% above equity. 

How the RREF works at local and regional level 

The Rural Shire of Jindyworobak has a total population of 11,038 as at the 1996 

Census. The Department of Infrastructure (DOI) projections give a population of 

11,520 for that LGA in 2001. 

As the HACC target population covers only the population living in the 

community, all those living in any kind of residential care facilities are excluded. 

The number of people with a moderate, severe or profound handicap aged 0 to 

85 in the LGA is estimated by applying the Statewide prevalence rates in the 

1998 Disability, Ageing and Carers Survey to the age structure of the projected 

population of Jindyworobak. This number is estimated as 1,136 people. 

The total number of people aged 85 and over are included in the target 

population. According to DOI projections, there will be 196 people aged 85 and 

over living in the community in Jindyworobak in 2001. 

The total HACC Target Population of Jindyworobak is 1,136 + 196 = 1,332 

people. 

Now consider rurality. The Shire of Jindyworobak has a density of 0.37 target 

group persons per square kilometre. All LGAs with a density below 2 target 

group persons per sq. km are assigned a 30% weighting for rurality. Weighting 

of Jindyworobak’s HACC Target Population by 30 % gives a RREF Population of 

1,732 people (1,332 x 1.30). 

Jindyworobak is a small rural shire in the Eastern Rural Region, which has 17 

LGAs in all, including a large provincial city. This exercise is repeated for each 

LGA. When summed, the total regional HACC Target Population accounts for 

8% of the State HACC Target Population, so the region will receive 8% of the 

HACC Growth Funds that are allocated through the RREF for 2000/01. If these 

growth funds were $15m, the region would receive $1.2m. 

As Jindyworobak has 0.34% of the total Victorian HACC RREF Target 

Population, it should notionally receive 0.34% of the growth funds, or $51,000. 

However, most of the region’s Aboriginal population is located in Jindyworobak, 

and following consultation on regional priorities, a decision is reached to provide 

more than the notional share of funds to Jindyworobak. 



Figure 1: Convergence on Relative Equity 1995/96 - 1999/2000 

20.0% 

15.0% 

BAR 

GRAM 

10.0% 

5.0% 

0.0% 

-5.0% 

-10.0% 

LOD 

HUME 

GIP 

WMR 

NMR 

SMR 

1995/96 

1996/97 

1997/98 

1998/99 

1999/2000 

-15.0% 

EMR 

-20.0% 

Region 

This steady progress towards equity is, of course, completely dependent on a particular 

definition of the HACC Target Population. The graph shows convergence towards equity as 

defined by the present RREF. If the operational definition of the target population were 

significantly altered, the trend shown in the graph would change. 

Alternative ways of operationalising the HACC target populations are presented as options for 

the Base Population in the RREF in Part B of this <strong>Report</strong>. 

It should also be noted that the operational definition is not intended to be used by service 

providers to calculate the number of people actually eligible for HACC services in their 

catchment area. If the RREF calculates that the HACC Base Population of a given municipality 

is 1775 people, it is not legitimate to conclude that 1775 people are actually in need of HACC 

services, and it is not legitimate to criticise the formula on the basis that local agencies believe 

more (or fewer) people are actually in need of services. The only legitimate use of the number 

is to say that the LGA has a given share of the State’s total HACC Base Population when the 

populations in all LGAs are calculated by the same method. 

A final comment on the current RREF is that it is a dynamic model and even with continuation 

of the current RREF there would be changes in the shares of HACC resources allocated to each 

region, in line with demographic trends. 

THE HACC TARGET POPULATION IN THE CURRENT RREF 

Definitions 

The main principle behind the RREF is that any geographical region should receive funds in 

proportion to the number of people in that region who need HACC services. Since the exact 

number of people requiring HACC services is not known with any precision, the allocation 

formula uses an approximation or proxy measure. The approximation used is the population 

who are eligible for HACC services in each region. 



According to the HACC Amending Agreement (1998), those eligible for services under the 

HACC Program comprise frail older people and younger people with disabilities and their 

carers living in the community and who are eligible to receive HACC services on the grounds of 

having a level of disability that affects their capacity to perform activities of daily living and 

participate in the community. This is the broad definition of the HACC target population and it 

will not be changed by the RREF Review. However, this broad definition is not sufficient to 

guide resource allocation because it does not specify how the number of ‘frail older people and 

younger people with disabilities’ will be measured. There is also a problem with handling the 

potential overlap between the number of frail or disabled people and their carers who may also 

be frail and disabled. A more ‘operational’ definition is needed. 

Before considering options for developing the base populations for a revised RREF and how 

they might be weighted to take account of need factors, it should be noted that the RREF 

allocates resources to regions on the basis of the HACC target population in each of the nine 

DHS regions in Victoria. The regional populations are built up from data for LGAs, but the 

allocations are made at a regional level. The allocation of these resources to different services 

operating in different local areas within each region is then decided on the basis of regional 

planning. The RREF does not determine resource allocations at LGA level, but the data used in 

building the RREF is one source of information for these decisions. The consultations 

identified the value of closer links between the RREF and the regional planning process, and 

DHS is committed to strengthening these links. 

Operationalising the HACC target population 

The way in which the definition of the HACC target population is operationalised is critical to 

the resource allocation outcomes realised through any formula based on that target population. 

The operational definition used in the current RREF was determined in 1992 and was limited by 

the range of data then available. It comprises three components: 

1. people of all ages living in the community who have a moderate, severe or 

profound level of core activity restriction (level of handicap). The 1998 ABS 

Survey of Disability, Ageing and Carers (DACS) is the source of information 

on the number of people with a core activity restriction and these figures are 

updated to the current year (e.g. 2001) for which the RREF is being calculated, 

using the Department of Infrastructure population projections for LGAs; 

2. plus those people aged 85 and over living in the community who do not have a 

core activity restriction; plus 

3. a weighting for rurality. 

As the way in which each of these components has been defined has been the subject of 

increasing debate, it is necessary to clarify the current definitions as follows: 

Handicap 

In the current RREF, handicap is the main factor representing need for HACC services. The 

1998 ABS Survey of Disability, Ageing and Carers (DACS) is the source of information on the 

number of people with a ‘core activity restriction’ which means the individual needs supervision 

or assistance from another person, either an informal carer or a formal service provider, to carry 

out activities of daily living and for social participation. The definitions used in DACS are set 

out in Appendix 2. Figures are updated to the current year (e.g. 2002) for which the RREF is 

being calculated, using the Department of Infrastructure population projections based on the 

1996 Census. 



There are however no reliable data on handicap by age group at the LGA level. Unlike the 

Census, the Disability, Ageing and Carers Survey is based on a sample of the population. The 

sample is selected in proportion to each state’s population and so provides reliable estimates of 

the prevalence of handicap in each state by age group. The sample is however too small to be 

used to provide separate estimates of age-specific prevalence for each LGA. The present RREF 

gets around this problem by applying the single set of statewide rates of handicap to the age 

structure in each LGA. As the figures in Figure 2 show, there is a very strong relationship 

between age and rates of handicap. 

This method assumes that there is no variation in age-specific rates of handicap between LGAs. 

In reality, some LGAs may have higher or lower rates of handicap for reasons other than age 

structure, but the current RREF cannot take these variations into account. 

It is also recognised that there is some variation in age-specific prevalence of handicap for 

different population groups. In particular, the higher age-specific rates of handicap in the 

indigenous population are taken into account in some programs, but not in the current RREF. 

The formula for the Commonwealth State Disability Agreement, for example, gives double 

weight to the Koori population in each state as the program provides double funding per capita 

for this population. 

Frail aged 

An adjustment for the frail aged is made in the current RREF by including the total population 

aged 85 and over who are living in the community, that is, not only those with moderate, severe 

or profound activities. 

Rural Weighting 

The only weighting in the current RREF is for rurality. The rural weighting takes account of the 

dispersion of the target population; the more dispersed the population, the higher the weighting. 

The rural weighting is calculated by dividing the number of people in the HACC target 

population in the LGA by the area of the LGA (in square kilometres). If the density is: 

above 10 target population persons per sq. km, no weighting is applied; 

between 5 – 10 target population persons per sq. km, the weighting is 10%; 

between 2 – 5 target population persons per sq. km, the weighting is 20%; and 

less than 2 persons target population persons per sq. km, the weighting is 30%. 

Thus rural LGAs with the lowest population densities are treated as though their Target 

Population were 30 % greater. They therefore attract a higher share of growth funds. 

The current rural weighting was determined by the RREF Steering Committee in 1992. 

Additional costs associated with service delivery in rural areas was the only factor supported by 

all the interest groups consulted, and a measure of the density of the target population was 

adopted. Two points about the way in which the rural weighting was decided warrant comment: 

The Steering Committee noted that it was unable to find empirical data to support the selection 

of the 10%, 20% and 30%, but indicated that given the extent of support for recognition of this 

factor, there was justification for including the “relatively nominal” percentages. The 

weightings are however far higher than the rural weightings included in any of the formulas that 

have been developed subsequently. 



The weighting was given in recognition of higher costs of service delivery in rural areas rather 

than higher need, but this recognition of higher costs was over-ridden with the introduction of 

unit pricing and the same unit prices have applied across the state since then. 

The contribution of the three components to the current RREF base population for the state is: 

87.7% Moderately, severely and profoundly handicapped, age weighted 


5.5% Population aged 85+ in addition to handicapped 85+ 

6.8% Rural weighting 

This outcome demonstrates very clearly that as well as the level of the rural weighting, the size 

and age structure of the LGA population to which the weighting is applied, is a major factor in 

determining the outcomes of any formula. Given the criticisms that the current RREF makes an 

inadequate adjustment for the frail aged and neglects factors affecting need for HACC services 

other than rurality, one basis for assessing alternative formulas is the extent of change in the 

contribution that each of these three components makes to the overall outcome. 

PROFILE OF CURRENT USERS OF HACC SERVICES 

Only a very basic profile of current users of HACC can be presented using data from the latest 

HACC User Characteristics Survey, conducted by DHS in 1998. Implementation of the HACC 

Minimum Data Set will provide a much fuller account of clients receiving services and enable 

the actual client population to be compared to the eligible target population. 

Age Groups 

Rates of activity restrictions that give rise to the need for HACC services increase rapidly with 

advancing age, and the majority of HACC clients are in the frail aged segment of the target 

population. Almost 80% of HACC clients are aged 65 and over, and more than 40 % are aged 

80 and over. With the exception of the very youngest age group, the majority of HACC clients 

are female. 

Ethnicity 

Access to HACC services on the part of clients of different cultural and linguistic background is 

indicated by data collected in the 1998 HACC User Characteristics Survey on country of birth, 

categorised on the basis of language spoken in country of birth. The proportions of clients born 

in the three major categories are: 

75% born in Australia 

8% born in English speaking countries 

17% born in non-English speaking countries. 



While this distribution of the total client population matches the birthplace distribution of the 

Victorian population, four provisos need to be noted: 

1. aggregate data on the total population born in non-English speaking countries do 

not provide a view of variations in access between different ethnic groups; 

2. there are marked variations in the concentrations of different ethnic groups in 

different areas of the state; 

3. the effect of factors other than age may have particular effects on the prevalence 

of disability in some ethnic groups; and 

4. access to available services is also affected by cultural considerations. 

WHAT REVISION OF THE RREF CAN AND CANNOT ACHIEVE 

Accepting that there is agreement that HACC resources should continue to be allocated to 

regions through a needs based formula, the Review needed to clarify the range of outcomes that 

revision of the RREF could be expected to achieve and, and what it could achieve. 

Revision of the RREF has the capacity to address the inadequacy of the present formula in not 

taking account of factors other than age that are seen to affect levels of handicap in local 

populations. 

Revision of the RREF will: 

• redefine the level of per capita funding that achieves an equitable allocation 

between regions on the basis of relative need, and 

• result in redefinition of the shares of HACC growth funds that each region is to 

receive in accord with this new definition of equity. 

The RREF is only one of a number of measures that determine the funding of the HACC 

program, and these other measures address issues beyond the current RREF or any revised 


Revision of the RREF will not increase the total level of resources available for the program. 

The level of growth funds that become available each year is determined by the amount put 

forward by the Commonwealth for matching and the level of matching funds put forward by the 

Victorian government, and these amounts depend in turn on federal and state budgetary 

processes. 

The RREF will not affect the amount paid for services under service agreements between 

providers and DHS. These prices are determined by the unit price cost structure established as 

part of the DHS funding strategy. 

Whilst special needs groups may be recognised in the formula, inclusion of such variables in the 

RREF does not guarantee better access or more responsive service delivery for the groups 

concerned. HACC Service Development Grants will have a continuing role in translating 

resources that are made available into modes of service delivery that are responsive to special 

needs. 



The RREF will not distribute resources to providers or to local areas, but only at the regional 

level. Information generated in the Review may however be useful in regional and local 

planning, together with other kinds of local information. 

The Review has been undertaken with the goal of advancing equity in the HACC program. 

Achievement of this outcome will be furthered if complementary measures can be taken in other 

areas of the program as part of the implementation strategy for any revised RREF. 


PART B: DEVELOPMENT OF OPTIONS FOR A 

REVISED RREF 

The development of options for the revised RREF proceeded in four steps, as set out in Chart 1, 

and outcomes were developed in a further three steps reported in Part C. This part of the report 

draws on the material presented in the Consultation Paper and Options Paper and the 

discussions in both rounds of Consultations. At each step, any further issues arising are 

canvassed and further investigations and analyses undertaken by the Consultancy Team are 

noted. The extent to which preferred options emerged is identified and these options have been 

then taken into account in modelling the outcomes reported in Part C; where no clear preferred 

options are identified and a range of options have been modelled. 

Chart 1: Development of Options for the RREF 

Step1: Options for defining the RREF base 


1.1 Data sources for identification of 

population in need of HACC services 

1 2 Prevalence of handicap 

< OPTIONS > 

1.3 Living in the community 

1.4 Options for Frail Aged 

1.5 Other exclusions – Veterans? 

Step 2: Review Options for Variables for 

weighting RREF Base Populations 

< OPTIONS > 

2.1 Identification of variables 2.2 Criteria for assessing variables 

2.3 Assessment of variables 

STEP 3: REVIEW OPTIONS FOR SCALING 

3.1 Scaling of variables 

< OPTIONS > 

3.2 Profile variables 

Step 4: Options for Weighting Variables 

4.1 Examples from other formulas 

4.2 Principal Components Analysis 

< OPTIONS > 

5.3 Expert Advice 

5.4 Adjustment to weighting 


Part B: Development of Options for a Revised RREF 

STEP 1: OPTIONS FOR DEFINING THE RREF BASE POPULATION 

1.1 IDENTIFYING THOSE IN NEED OF HACC SERVICES 

In considering options for operationalising the HACC target population and then considering 

need factors to be taken into account in weighting the RREF, the Review team found it useful to 

distinguish between: 

1. The HACC target population which is defined in the 1985 HACC Act 

as younger people with a disability and frail aged individuals who are 

living in the community and who are eligible to receive HACC services 

on the grounds of having a level of disability that affects their capacity 

to perform activities of daily living and participate in the community. 

2. The RREF base population which in the first instance is based on the 

operationalisation of the HACC target population at both 

Commonwealth and State levels by reference to the ABS Disability, 

Ageing and Carers Survey as those living in the community with a 

moderate, severe or profound level of core activity restriction. 

3. The RREF weighted population which is the RREF base population 

for each LGA weighted by the various need factors considered to more 

accurately discriminate between regions on the basis of different levels 

of need and hence to be taken into account in resource allocation. The 

only weighting factor in the current RREF is for rurality. 

The need for HACC services arises when people experience on-going difficulties or need 

assistance in carrying out activities of daily living and participating in social and community 

life. Defining the HACC target population, therefore, requires a means of identifying those who 

experience such difficulties or who need assistance. Two further considerations need to be 

noted. First, as HACC services have a preventative function, it is necessary for this definition to 

include those who experience difficulties and are at risk of increasing dependency as well as 

those who already have a significant limitation and need assistance. Second, eligibility for 

HACC is based on dependency and need for assistance only, and fees are assessed only after a 

client’s need for support is assessed. Fees paid by many clients cover only part of the cost of 

service, and only a relatively small proportion pay full fees; using HACC services on a full fee 

paying basis or opting for an alternative provider, if there is one available, is thus a choice for 

relatively few, and those paying full or part fees should continue to have the option of 

purchasing services from HACC providers. 

A number of reservations were expressed about the use of the DACS data for identifying the 

base population for the RREF. Frequently Asked Questions concerned the definitions used and 

methods and scope of the survey. While answers to most of these FAQs about technical aspects 

of the survey can be found in ABS reports on the DACS, these are not readily available in the 

field, and the common FAQs and responses are included in Appendix 2. 

A further issue of particular concern was the adequacy of the DACS for identifying persons of 

Koori background, due to the sample size, declaration of Koori identification and cultural 

factors affecting expression of disability and need for assistance. 



Notwithstanding these reservations, participants in consultations and those who made 

submissions accepted that the DACS might still be the best available data and hence remain the 

appropriate starting point. The Review team’s investigations confirmed this view. Whilst a 

number of other studies of disability and service use were referred to through the consultation 

process, analysis by the consultants confirmed that none of them capture the total population of 

both users of services and those who do not currently access services as well as the DACS does. 

The DACS has a number of strengths that make it the most robust and best available data. No 

other data source was identified that could compare with the DACS on the following grounds: 

• it has the same high technical standards as the Census and other ABS Surveys. 

• it is population based, that is, it is collected from a sample of over 37,000 people in 

the community; 

• the sample covers the total population, and so is not restricted to just those who 

have been assessed or who are receiving services; 

• the DACS is widely used in planning of services for individuals with on-going and 

relatively stable disabilities and chronic health problems; 

• it is updated every five years; 

• comparisons between the DACS and other available data sources (including 

Centrelink DSP Data) have found close agreement; and 

• the DACS collects data from personal interviews with younger people with 

disabilities, frail aged people and their carers and so captures consumer views. 

1.2 PREVALENCE OF CORE ACTIVITY RESTRICTION 

The term core activity restriction or handicap is used throughout this <strong>Report</strong> as technical terms 

as used in the ABS surveys. A distinction is first made between impairment, disability and 

handicap, and then moderate, severe and profound levels of handicap or restriction are 

determined. These definitions are set out in Appendix 2. 

The DACS provides both a statewide rate of disability and regional rates. The reliability of the 

regional rates is however far lower, and restricts the rates to only two age groups, under 70 and 

over 70. These limitations pose major difficulties when differences in age structure between 

LGAs, and changes in age structure over time, are significant factors in determining the size of 

the base populations for the RREF. 

These limitations could only be fully overcome if data on the prevalence of different levels of 

handicap, by age group, was available at the LGA level. It is precisely because such data are 

not available that a range of other factors have to be taken into account in the RREF as 

indicators of need. These indicators developed using LGA level data and are applied to the base 

population calculated for each LGA, and more accurate initial RREF base populations can be 

calculated using the statewide prevalence for each five year age group for the total population 

than by using regional prevalence’s that are available for two very broad age groups. 

Continuing development of the DACS survey and other measures of prevalence of disability 

may provide alternative measures in the future. 



1.3 POPULATION LIVING IN THE COMMUNITY ONLY 

As the RREF base population covers only the population with moderate, severe and profound 

handicap living in the community, attention has to be given to the way in which the population 

in aged residential care and disability supported accommodation is excluded. While this issue 

was not an area of discussion in the consultations and submissions, the Review recognised the 

need to revise the way this population is defined and excluded to take account of variations in 

access to residential care for both the aged and for younger people with disabilities at the local 

level. 

Information on the population in non-private dwellings is collected in DACS through a survey 

of a sample of non-private dwellings which are further divided into “cared accommodation” and 

other non-private dwellings. Cared accommodation in turn includes hospitals, nursing homes 

and aged care hostels and other facilities including hostels for people with disabilities, 

children’s homes, drug rehabilitation centres and some cared components of retirement villages. 

Three issues arise from the exclusion of all those in non-private dwellings: 

1. Neither the non-private dwellings category nor the cared accommodation 

care sub-category correspond to the restriction of the HACC target 

population to those living in the community, but rather include a mix of 

people who are eligible and who are not eligible. Those who are in hospital 

at the time of the survey and who have lasting activity restrictions will be 

eligible for HACC services on return to the community. Residents of some 

of the “other” forms of cared accommodation, and “other non-private 

dwellings”, notably residents in private supported residential services (SRS) 

and serviced apartments in retirement villages, may also be eligible for 

HACC. A closer alignment is required between facilities that are funded 

through the aged and disability residential care programs and the ABS 

definitions for the population living in the community and in various forms 

of supported accommodation. Until this alignment is achieved, more 

accurate calculations of the RREF base population living in the community 

can be obtained by first estimating total handicapped populations for LGAs 

then deducting the actual numbers of people living in funded residential 

care facilities. 

2. All but 3,100 of the total 138,900 people in aged residential care facilities 

and “other” cared accommodation had moderate or profound levels of 

handicap; this level of handicap reflects the requirements for assessment 

prior to admission to these facilities, and most of those with low levels of 

handicap are spouses of more dependent people in aged care facilities. All 

of this population can effectively be taken as belonging to the moderately, 

severely and profoundly handicapped population and so is appropriately 

subtracted from the total LGA handicapped populations to give the balance 

living in the community. Data on residents in these facilities by age and 

LGA can now be obtained. 

3. Whereas the current RREF makes a “one-off” adjustment on a statewide 

basis and only at the time of the DACS survey, data on actual residential 

care populations can be obtained on an annual basis, and deducted in annual 

calculations of the RREF base population. The treatment of the population 

in non-private dwellings in the current RREF was dictated by the lack of 

alternative data at the time, but is now unnecessarily complicated and less 

accurate than the use of data on actual residential care populations. 



As the HACC target population includes only those living in the community, the next step in 

calculating the base population for the RREF is to subtract those in residential care. The option 

now proposed is more straightforward and more accurate than the method used in the current 

RREF. The current method has a number of inconsistencies which arise when applying the 

DACS statewide prevalence of handicap for the population in private dwellings only to the total 

LGA populations projected by DOI, and then subtracting those in the “cared accommodation” 

component of non-private dwellings, from age 85 years and over only. This limitation stems 

from the restricted data available at the time the RREF was devised in 1992 and can now be 

addressed 

The DACS survey shows that virtually all those in the “cared accommodation” component of 

the population in non-private dwellings have at least moderate levels of handicap. The actual 

population in residential care is most appropriately subtracted from the handicapped population 

in each LGA rather than from the total LGA population. 

Exact figures on the population in aged residential care and in disability accommodation are 

now available by LGA, and these numbers are subtracted from the initial RREF base population 

for each LGA. The subtraction is restricted to the population in residential care and does not 

include CACP places as CACPs draw on HACC services over and above those covered by 

CACP funding, notably for nursing care. The substantial increases in CACP places may 

warrant further consideration in future. 

The total number of individuals aged under and over 70 with moderate, severe or profound 

levels of handicap, the numbers in residential aged care and disability accommodation, and the 

balance living in the community are detailed in Table 1.1. 

Table 1.1: Components of HACC Base Population, 2002 

Population component 

Aged 

under 70 

Aged 70 

and over 

Total 

Total population 4,358,102 449,726 4,807,828 

Total with moderate, severe and profound 286,218 162,897 449,115 

handicap 

Living in cared accommodation 4,615 38,791 43,406 

Living in community 281,603 124,106 405,709 

1.4 ADJUSTING FOR THE FRAIL AGED COMPONENT OF THE HACC TARGET 

POPULATION 

A diversity of views about the need to adjust for the frail aged component of the HACC target 

population, and how to make this adjustment, were expressed in the consultations and 

submissions. This decision is informed by examination of the level of handicap in the 

population under and over age 70, as detailed in Table 1.2. 



Table 1.2: Level of activity restriction, for population under and over 70 years, in 

Private Dwellings only, 1998 DACS 

Level of activity Under 70 Over 70 Total 

restriction 

‘000 % ‘000 % ‘000 % 

Moderate 107.5 41.0 36.9 35.1 144.4 39.4 

Severe 104.5 40.0 24.4 23.5 128.9 35.2 

Profound 49.5 19.0 43.7 41.6 93.2 25.4 

Total 261.5 100.0 105.0 100.0 366.5 100 

These data also point to the justification for and possible options for making different 

adjustments for the frail aged as follows: 

• A higher proportion of the handicapped population at older ages have a higher level 

of activity restriction, with 41.6% having profound restriction, whereas moderate 

levels of restriction dominate at younger ages and only 19% have a profound 

restriction. 

• Adjusting on the basis of disability rather than age per se maintains the focus of the 

HACC target population definition on those in need of help with activities of daily 

living. 

• Victoria presently has lower levels of aged residential care and an increasing 

number and degree of frail older people who will need to be supported in the 

community as aged residential care provision trends downwards to reach the 

Commonwealth planning ratios by around 2005-06. 

Reflecting these increasing levels of restriction, the frail aged component of the base population 

makes much higher use of HACC services, with those aged 70 and over accounting for around 

70% of the HACC client population. Younger people with disabilities make less use of HACC 

but receive services from programs operating under the Commonwealth-State Disability 

Agreement. Figure 2 compares the age distributions for the total population with moderate, 

severe or profound levels of handicap as identified by the DACS, the HACC client population 

and the users of Disability Services in Victoria. 

Figure 2: Comparison of Age Distribution of DACS population, 

Disability Program Clients and HACC Clients 

25 

20 

DACS 

Disability Program Clients 

% 

15 

HACC Clients 

10 

5 

0 

0-4 5-14 15-24 25-34 35-44 45-54 55-59 60-64 65-69 70-74 75-79 80-84 85+ 

Age Group 



Three options emerged as alternatives to maintaining the current RREF option of including all 

those aged 85 and over living in the community: 

1. Include only those with moderate, severe and profound handicap at all 

ages. The basis for not making any further adjustment for advanced 

age is that the frail aged could be defined as those with handicaps and 

so those who do not have a handicap are not part of the HACC target 

population. 

2. Lower the age for defining the frail aged to 70 years and over to reflect 

the predominance of this age group in the HACC client population. 

One advantage that could be claimed for this approach is consistency 

with the aged residential care planning ratios; however, those ratios 

apply only to the aged population, so the issue of relativity to younger 

age groups does not apply. The disadvantage of this option is that it 

includes a substantial number of older people who are not within the 

HACC target population because they do not require assistance in daily 

living activities and for social participation. While the total aged 

population comes within the scope of health promotion programs, 

primary prevention is beyond the scope of HACC. 

3. Give additional weight to the moderately, severely and profoundly 

handicapped population aged 70 and over. Figure 2 gives a guide to 

added weight that would bring the frail aged population identified by 

DACS more into line with the representation of older age groups in the 

HACC client population, which shows that shares of the HACC client 

population in the age groups over 70 are approximately double their 

shares of the DACS population. Accordingly, this segment of the base 

population has been doubled in the third option. This option has the 

advantages of consistently defining the target population on the basis of 

disability, and focusing on the secondary prevention functions of 

HACC for a client population with established disability. 

The effects on the age balance of the total base population arising from adjusting for the frail 

aged in the current RREF and these three options can be seen in Table 1.3 which compares: 

• the numbers and proportions aged under and over 70 for the total Victorian 

population; 

• the HACC client population under and over 70; 

• the current RREF; and 

• the three options for RREF base populations calculated on the statewide prevalence 

of moderate, severe and profound handicap and with different adjustments for the 

frail aged. 



Table 1.3: Comparisons of Base Population Options for adjusting for Frail Aged 

Population Under 70 Over 70 Total 

% % No. ‘000 

Total Victorian population 2001 91 9 4,770.4 

HACC Client population ~30 ~70 

RREF 92: Handicap to age 85 in community plus total 68 32 383.4 

85 and over in community 

Option 1: Handicap at all ages in community, no 

71 29 366.6 

adjustment for frail aged 

Option 2: Handicap to age 70, plus total 70 and over, 42 58 626.4 

in community 

Option 3: Handicap to age 70, plus handicap aged 70 

and over, in community, doubled. 

55 45 471.6 

The figures in Table 1.3 are based on the 1998 DACS population in private dwellings only and 

so do not correspond exactly with figures for RREF base populations given later in this <strong>Report</strong>. 

In the base populations discussed below, only residential aged care and disability 

accommodation and not other forms of non-private dwellings have been subtracted, and other 

adjustments have been also made as detailed below. 

As both Options 2 and 3 give added weight to the population aged 70 and over it is important to 

identify the potential impact of this adjustment across the state. Overall, 9% of Victoria’s 

population was aged 70 and over in 2001, but there are wide variations between LGAs. Melton 

has the lowest proportion aged 70 and over, just 3.5% and Queenscliffe the highest, 21.0%. Of 

the 78 LGAs, 30 have less than 9% aged 70 and over, and 20 of these are metropolitan LGAs. 

Of the 48 LGAs which have more than 9% aged 70 and over, 37 are rural LGAs. However, 

even though more rural LGAs are older than metropolitan areas, the majority of the older 

population live in metropolitan areas. The proportion aged 70 and over is mapped in Figure 3. 

As weighting of base populations takes the absolute numbers of older people into account, the 

outcomes reflect the actual numbers of older people in any LGA rather than just the proportion 

they comprise of the total population. Thus, while Queenscliff has the highest proportion aged 

70 and over, it has the third smallest number of aged resident, less than 500 people. At the same 

time, over one third of the all those aged 70 and over live in just eight large metropolitan LGAs 

which each have over 14,000 aged residents, together with Greater Geelong. 

These differences in the distribution of the population aged 70 and over are amplified in Options 

2 and 3 in somewhat different ways. Option 2 gives increased weight to the population aged 70 

and over directly by counting all aged 70 and over in. Doubling of the handicapped population 

aged 70 and over in Option 3 gives more weight to the oldest age groups as rates of handicap 

increase with advancing age. In Option 3, the total handicapped population aged 70 and over is 

doubled before any of the other population components are subtracted. The effect is then to 

discount the subtractions by 50%, and this is seen to be consistent with allowing some 

continuing use of HACC services by these population segments as discussed further below. 

1.5 OTHER EXCLUSIONS 

The implementation of the Veterans’ Home Care Program in early 2001 was identified as 

having the potential to alleviate demand for HACC services as it removes eligible veterans from 

the HACC target population. The number of veterans estimated to be eligible for the VHC in 

early 2001 was 67,766. The way in which the veteran population should be recognised was an 

area of considerable discussion in the Round 2 Consultations and this matter is taken up below. 




1.6 SUMMARY OF OPTIONS FOR DEFINING THE RREF BASE POPULATION 

The options identified for the five elements of the definition of the RREF base population are 

summarised below. The Round 2 Consultations sought views on these options. 

What are the 

options for data 

for defining 

population in 

need of HACC 

services? 

What are the 

options for 

prevalence of 

handicap? 

What are the 


defining the 

population in 

the community? 

What are the 


adjusting for the 

frail aged? 

What are the options 

for other exclusions? 

! Continued use of data from the ABS Disability, Ageing and 

Carers Survey for defining the HACC Base Population is the 

identified option at this time. 

! Reconsider should alternative data bases become available in 

future 

! The identified option is to prepare initial Base Populations 

using: 

! statewide rates of prevalence of handicap to calculate the 

number of people in each age group with a moderate, severe 

or profound handicap in each LGA, 

! using the LGA populations projected by DOI. 

! To obtain the handicapped population living in the community, 

the identified option is to subtract the following groups from 

each LGA initial base population: 

! actual residents in residential aged care 

! residents in disability accommodation 

! Further consideration to be given to CACP places in future. 

! Which of the following do you consider the most suitable base 

population for the RREF? 

! RREF92- adjustment of inclusion of total population in the 

community aged 85 and over, 

! Options for adjusting for the frail aged. 

! Which option do you prefer for adjusting for the frail aged: 

! Include only the moderately, severely and profoundly 

handicapped at all ages; 

! Include all those aged 70 and over; 

! Double the number of moderately, severely and profoundly 

handicapped aged 70 and over in recognition of higher rate of 

profound handicap. 

! Should the actual number of veterans aged 70 and over eligible 

for the Veterans’ Home Care Program in each LGA be subtracted 

from the RREF base population? 

! Are there any further exclusions that should be considered? 



1.7 FURTHER ISSUES AND PREFERRED OPTIONS 

1. Data for defining the population in need of HACC services 

The concerns expressed in the Round 1 consultations regarding use of the DACS data 

were substantially addressed in the Options Paper. As well as providing answers to a 

number of Frequently Asked Questions about the DAC survey, as detailed in Appendix 

2, a number of strengths of the DAC survey data set out in the Options Paper were 

acknowledged in the field. 

No further issues were identified in the Round 2 consultations, but the need for ongoing 

input of DHS and HACC providers to the development of the 2003 DACS was 

emphasised. 

2. Options for prevalence of handicap 

Use of the statewide prevalence was accepted as providing the most robust estimates to 

which weightings for need could be applied. 

No further issues were identified. 

3. Population living in community – exclusion of residential care 


Exclusion of the population in aged residential care facilities and disability 

accommodation was agreed, with the proviso that the latest available data on actual 

residents in these facilities be used rather than approved beds, which included beds 

approved in principle but not yet in operation. The relevant data for disability services 

is available from DHS and has been sought for aged residential care from the 

Commonwealth. 

Some concerns were expressed about the historical pattern of supply of residential care 

leading to movement from one local area to another. Such movement is however taken 

into account as both residents in facilities and community residents are counted in the 

LGA in which they are located at the time they are receiving either form of care. 

There was general agreement that CACPs and other State-funded packages for younger 

people with disabilities should not be subtracted given that clients in receipt of packages 

may still use some HACC services not funded as part of their package, notably nursing. 

The use of some community service by residents in aged care hostels and disability 

accommodation was recognised. There is some trade off here, as clients receiving 

CACPs are not deducted. Further, the deduction of the residential aged care population 

after doubling the frail aged population in Base 3 has the effect of discounting that 

population by only 50% and so gives some recognition to continued use of HACC 

services by residents. Further consideration also needs to be given to recognition of the 

local impact of different kinds of residential care services on HACC in regional and 

local planning. 


4. Adjustment for the frail aged 


Clarification was sought as to the rationale for doubling the population aged 

70+ with core activity restrictions in Base 3. As well as reiterating the 

discussion in the Options Paper, the need to achieve a better match between the 

RREF Base Population and the share of the HACC client population aged 70+ 

was demonstrated by reference to Figure 2 above which shows the age 

distribution of the population with core activity restrictions reported in the 

DACS, the HACC client population and the Disability Program client 

population. This graph shows that compared to the DACS population overall, 

disability service clients are predominantly in younger age groups and HACC 

clients are predominantly in the older age groups. Doubling the frail aged 

component of the DACS population takes account of the greater propensity of 

frail aged individuals to use HACC services whereas younger people with 

disabilities are more likely to use the range of other services provided through 

disability programs such as educational, training and employment services. 

Achieving a better match in terms of the proportion of clients in different age 

groups does not take account of the actual proportion of services that they use 

or the duration of service use. Rather than increasing the frail aged component 

of the target population to achieve an exact match with the share of the HACC 

client population, doubling the frail aged was seen to make a sufficient albeit 

somewhat arbitrary adjustment. 

While inclusion of the total population aged 70+ in Base 2 was seen to 

acknowledge the preventative functions of HACC, it has to be stressed that 

health promotion for older people in general is the concern of population based 

health promotion programs, initiatives such as the Health Promotion for Older 

Persons Program, and other priority initiatives such as influenza immunisation 

for older people, which provide both primary and secondary prevention, and 

other rehabilitation programs for tertiary prevention. Successful outcomes of 

these programs should over time moderate the demand for HACC services to 

some extent. The preventative component of HACC is focused on secondary 

prevention, that is, maintaining function among a population with already 

established activity restrictions. At the same time, it needs to be recognised that 

the opportunity for early intervention through HACC is not precluded as the 

ABS definition of “moderate” activity restriction is not unduly restrictive; the 

base population defined on the basis of DACS definition of those with moderate 

restrictions covers those who have difficulty in performing an activity, 

including those who can carry out activities only with the use of aids, as well as 

those with severe or profound restrictions who respectively sometimes or 

always need assistance (see Appendix 2 for details of DACS definitions). 

The use of the total population aged 70+ in residential care planning rather than 

the aged population with moderate, severe and profound handicaps, or even 

only those with profound and severe handicap has been the subject of some 

debate. Estimates of bed requirements based on these different populations 

made by the AIHW (1995) however show that higher ratios based on 

progressively smaller specific age groups over the older age range tend to 

balance out with the present ratios for the larger population aged 70 and over. 

Of more relevance to the RREF base population is the fact that the residential 

care planning processes apply only to the aged population so the issue of having 

to measure relative need across younger and older age groups does not arise. 



Compared to inclusion of the total population aged 70 and over in Base 2, 

adjustment for the frail aged by doubling the DACS handicapped population 

aged 70+ in Base 3 was seen to give a better match to the actual HACC client 

population as it reflects the definition of the HACC target population and broad 

eligibility criteria relating to need for assistance, and allows for attention to 

secondary prevention among those with some level of activity restriction. 

Balancing the discussion of adjustments for the frail aged, some issues 

concerning the way in which younger people with disabilities were covered in 

the base population were raised: 

The concern that adjustment for the frail aged would disadvantage LGAs and 

regions areas with relatively lower proportions aged 70+ in the population was 

addressed by the age specific rates of handicap being applied to the underlying 

age structure, so that relatively larger younger age cohorts would be taken into 

account. 

It was also noted that 0-4 age group were included in the 1998 DACS, but not 

in the 1993 survey. 

5. Veterans eligible for DVA Veterans’ Home Care Program (VHC) 

Views as to how veterans eligible for the VHC should be taken into account 

showed a marked shift between the two rounds of consultations. At the time of 

the Round 1 Consultations, in November-December 2000, arrangements for the 

VHC had not been finalised, but by March-April 2001, implementation had 

commenced and providers’ actual and anticipated experiences were coming into 

play. 

The resources that VHC can add in Victoria for service provision to some 

67,700 eligible veterans, not all of whom will be service users at any one time, 

are close to the total annual growth funds for HACC which have to be spread 

across the total target population, among which there is a recognised level of 

unmet need. Notwithstanding the service limits specified in the VHC 

guidelines, access to VHC resources has the capacity to provide eligible 

veterans with levels of service at least comparable to existing HACC services 

and in doing so, would free HACC resources for other clients. In considering 

how veterans should be taken into account in the base population, it is useful to 

separate the resource issues of relevance to the RREF as a resource allocation 

formula from the practical issues of implementation of VHC that were raised by 

providers in the Round 2 consultations. 

Implementation issues: The view that veterans eligible for VHC should not be 

subtracted from the RREF base population reflected the early implementation 

phase of the program. While there was caution overall about the rate of 

progress with implementation, and the proportion of existing veteran clients 

who would opt to switch to VHC, it was evident that as well as encountering 

some problems, providers were reaching satisfactory solutions, suggesting that 

early uncertainties could be ironed out in time. Several suggestions were put 

forward for promoting take up of VHC by way of positive presentation of 

options to veteran clients, especially continuity of direct care staff, and other 

practical matters. Negotiations between DVA, DHS, the Municipal Association 

of Victoria and other provider bodies also has a part to play in facilitating 

implementation, as would the VHC evaluation process. 



Resource issues: Focusing on resource issues, participants in the Round 2 

consultations acknowledged that it was important that VHC resources were 

used to the best advantage, and that fuller take up would be realised by January 

2002 when funding under any revised RREF would come into effect. Making 

an adjustment for the veteran population in the RREF base population was also 

seen as an incentive for providers to maximise take up of VHC among eligible 

clients. A further reason for excluding veterans eligible for VHC was that this 

population is very unevenly distributed and if no adjustment was made, it was 

argued that providers in areas with large veteran populations would be able to 

“double dip” with access to HACC funds and VHC funds, while those in areas 

with fewer veterans would be penalised. 

Given that the RREF is essentially concerned with resource allocation, and 

VHC provides additional resources for HACC type services, and taking account 

of the time interval to implementation of any revised RREF, it is proposed to 

subtract eligible veterans from the RREF base population. Modelling has 

proceeded on this basis, but there will be opportunity to review the adjustment 

for the VHC eligible population when any new RREF is implemented. As the 

numbers of veterans eligible for VHC will change from year to year, this data 

will have to be updated annually and there will be opportunity for further 

review. 

Three further considerations are: 

! Deduction of the eligible veteran population after the doubling of the frail aged 

in Base 3 has the effect of discounting by 50% and so allows for some 

continuing use of HACC services by veterans who are eligible for the HVC. 

! Under a continuation of the current RREF some adjustment would be made for 

VHC clients and funding. 

! The veteran population is now ageing rapidly and the population excluded from 

the RREF base populations will need to be updated annually with data from 

DVA. 

6. Other issues 

Shortfall in Residential Care 

The Options Paper presented initial options that included the shortfall in 

residential care in the RREF as a need variable. The shortfall in each LGA was 

measured as the difference between the operational beds and the number of 

beds that the LGA should have on the basis of the target ratio of 90 beds per 

1000; most of the shortfall comprises hostel places. A number of conceptual 

and practical issues that posed difficulties in dealing with the shortfall in this 

way were however noted. The alternative of taking the residential care shortfall 

into account in the base population was then considered, but many of the same 

problems remained. Three sets of issues were identified in the Options Paper 

and in the Round 2 Consultations. 



Measurement and apportioning of shortfall to LGAs: 

• Almost half the LGAs had an excess of residential care places, 32 out of 78, 

and only 13 had a shortfall in excess of 20 per 1000. This skewed 

distribution and whether to take the shortfall into account as a ratio per 

1000 population aged 70 and over, or as an absolute number, posed 

problems for scaling as a need variable. 

• There were also difficulties in measuring the shortfall as the difference 

between operational beds and the target ratio at any one time, given a 

considerable degree of flux in the sector at present. With a large number of 

approvals in principal in existence, the rate at which AIPs come on stream 

is critical, but is not known with any certainty and when blocks of around 

30 beds come on stream at a time, the impact on the shortfall is marked, and 

occurs in a short time. 

• The shortfall is extremely uneven geographically, with some LGAs having 

persisting shortfalls while others have beds in excess of the ratio. While no 

penalty would be imposed for excess beds, only a small number of LGAs 

would receive a medium to high weighting on this need variable and so it 

make only a small contribution to overall need weighting. 

• Difficulties were encountered in obtaining timely data on actual operational 

beds from the Commonwealth for comparison with the target numbers. 

Impact of shortfall on HACC 

• A detailed analysis was made of several factors related to how the 

residential care shortfall affected the need for HACC services and how this 

variable should be included in the RREF. These factors included whether 

high and low care should be separated; whether CACPs should be included: 

the distribution of the shortfall across LGAs; whether shortfalls in some 

LGAs were balanced by excess provision in adjacent LGAs; and difficulties 

in projecting on the basis of existing shortfalls as approved beds coming 

into operation in the next five years will be concentrated in areas of greatest 

shortfall. 

• While the shortfall of beds has a pronounced impact in the LGAs 

concerned, it is evident that excess beds in some LGAs may balance 

shortfalls in some adjoining LGAs, but not in all cases, but this effect 

cannot be readily taken into account. “Excess” beds arise mostly in LGAs 

where public sector facilities are located, and these facilities have regional 

roles. Averaging levels of provision across groups of LGAs or regions 

would reduce local deficits and even out provision across the region, but it 

is difficult to apportion “excess” places across regions in accord with actual 

use. 

• The shortfall is taken into account in the base population options that adjust 

for the frail aged. Base 3 especially makes a significant adjustment by 

doubling the moderately, severely and profoundly handicapped living in the 

community, hence LGAs with more frail aged people in the community due 

to a shortfall of residential care places gain most. The base populations also 

make these adjustments on the basis of the LGA in which the individual 

actually resides. 



• Data from the Aged Care Assessment Teams has consistently shown that a 

substantial proportion of those assessed as requiring nursing home care are 

in acute care immediately prior to admission to residential care rather than 

living in the community. 

Resource implications 

• It was considered that inclusion of the residential care shortfall in the RREF 

could imply that HACC rather than the Commonwealth residential care 

program should make up for the deficit of resources. The level of resources 

available to HACC however means that this is certainly not the case and 

funding for residential care places is needed either directly or by way of 

CACPs or Extended Aged Care at Home packages. 

• Consistent with exclusion of the VHC eligible population on the grounds of 

alternative funding being available, the Commonwealth funds the 

Residential Care Program and should be responsible for funding up to the 

target levels. 

• While acknowledging the local impact of shortfalls in residential care on 

HACC services, the most appropriate response to this situation is seen to be 

through the Commonwealth residential care program. In the light of the 

considerations noted above, and especially the need to address the 

residential care shortfall directly rather than through HACC, it is considered 

that the RREF should not include the residential care shortfall either as a 

need factor or in the base population. 

Cross-border regions 

In regions bordering other states, queries were raised about how cross border 

movements could be taken into account in the base population. While 

recognising the importance of this issue to local areas, the RREF base 

population can only be based on the resident population reported at the Census 

and in other data bases. Issues of cross border access and delivery of services 

need to be addressed both at Commonwealth-State level and in local planning 

in these border areas. 

Alternative options for base populations 

Some participants suggested additional permutations for the base population. 

Some proposals were made for different adjustments for the old-old on the basis 

of the high rate of handicap in the 85 and over age group. The small size of this 

group however mean that any adjustment in addition to the Base 3 option of 

doubling the population aged 70+ with core activity restrictions would make 

only a marginal difference but add complexity to a revised RREF formula. 

Another variant involved doubling those with a profound core activity 

restriction aged under 70. This option is limited by the low rates of profound 

handicap at younger age groups, which mean that separating out the different 

levels of handicap would reduce the reliability of estimates of prevalence of 

handicap, and add complexity to the model. Maintaining use of the full rates 

for moderate, severe and profound handicap for all age groups also provides 

greater consistency with formulas used in other programs. 



1.8 RESOLUTION OF OPTIONS FOR THE RREF BASE POPULATION 

Data for defining the population in need of HACC services 

Continue to use DACS data, with DHS to continue to liaise with the ABS to optimise the 

usefulness of the next DACS survey for planning of HACC and other programs. 

Options for prevalence of handicap 

Use statewide prevalence 

Population living in the community: 

Proceed with modelling on a provisional basis with use of currently available data for aged 

residential care on approved beds as at September 2000, but to be updated with data on actual 

residents in implementation of a revised RREF. 

Adjustment for the frail aged 

The views expressed at the consultations and the tally of the response sheets completed by 

participants showed that: 

• Preferences between Base 2 and Base 3 showed a marginal preference for Base 2. 

The grounds that Base 2 gave a larger base population can be set aside as the size of 

the base population does not affect resource levels, while the goals of early 

intervention and primary prevention in the young-old population go beyond the 

scope of HACC. 

• Those preferring Base 3 perceived that it was more balanced towards the frail aged 

70+ and those with chronic illnesses, more accurately reflected the current HACC 

user group and those requiring complex care, and allowed for secondary prevention. 

• Given this balance of preferences and to provide comparison of outcomes, models 

are presented below for a revised RREF with both base populations Option 2: 

including the total population 70+, and Option 3: doubling the moderately, severely 

and profoundly handicapped population aged 70+ 

Veterans 

As the RREF is a resource allocation tool, the veteran population eligible for the VHC program 

should be excluded from the base population because of the additional resources that are now 

available to these clients. This exclusion in the formula does not mean that VHC eligible 

veterans are excluded from receiving HACC services. 



STEP 2: OPTIONS FOR VARIABLES FOR RECOGNISING NEED IN THE 


The failure to take account of factors other than age that affect the need for HACC 

services in local populations is a major shortcoming in the current RREF. The 

Consultation Paper posed three questions to canvass the variables that needed to be 

considered to address this shortcoming. 

1. What factors affecting prevalence of handicap and need for HACC services, in 

addition to age, should be considered for inclusion in the RREF? 

2. What are the strengths and limitations of composite indexes of socio-economic 

disadvantage compared to other specific variables? 

3. How should factors affecting those born in non-English speaking countries, Koori 

communities and geographic factors such as remoteness be dealt with in the 

funding distribution formula? 

2.1 RANGE AND NATURE OF NEED VARIABLES 

A total of 29 variables were suggested in the Round 1 Consultations. As well as 27 single 

variables, two composite indexes were noted, namely the Index of Relative Socio-Economic 

Disadvantage (IRSED) and the Accessibility/Remoteness Index for Australia (ARIA). These 

variables are grouped and listed under five dimensions of need in Box 1. The eight variables 

shown in bold in Chart 2 have already been considered in the options for the RREF Base 

Population options in Step 1, leaving 20 variables for consideration. 

Three aspects of the nature of need variables to be considered for inclusion in the RREF warrant 

comment: 

1. The range of need variables proposed for consideration are indicators of 

broad dimensions of functioning and well-being, not direct measures of 

need for HACC services. If such direct measures were available, it 

would not be necessary to consider the array of variables that are 

canvassed here. Further, the variables are used in the RREF as 

indicators of relative need, not absolute levels of need. 

2. The availability of data, and the quality of that data, change over time. 

Any variables can only be measured with data available at a given time, 

but the continuing development of indicators of health and well-being, 

and improvements in data collection, means there is potential for 

change in the variables included in the RREF in the future. This 

potential for incorporating new variables and updated and improved 

data sources as they become available make the RREF a dynamic 

formula that will be modified following the next census in August 2001 

and again after the next DAC Survey scheduled for 2003, and in the 

light of further developments in the measures such as the Burden of 

Disease and other indexes of well-being. 



3. All data on need variables in the RREF are compiled at the LGA level. 

These data give an indication of the level of need among the whole 

population, using data on need characteristics taken from the full 

population count in the Census. The DACS survey does not collect 

data on the same range of need variables and hence this information is 

not available specifically for the DACS population. However, the need 

characteristics of the DACS population are reflected in profile of the 

total population in any area, and at the same time, the level of need in 

the wider community in which individuals with disabilities live has a 

bearing on their well being and access to services. 

Box 1: Variables suggested for consideration for inclusion in RREF 

Dimension of 

No. Variables Suggested 

need 

Socio-economic 

factors 

8 

Health 

indicators 7 

Population 

subgroups 

Service system 

factors 

7 

3 

Location factors 4 

Public housing, Household income, 

Living alone, 

Carer availability, Carer Payment, Carer Allowance 

Index of Relative Socio-Economic Disadvantage 

Take up of benefits: combining Disability Support Pension, Child 

Disability Allowance and full rate Age Pension. 

Handicap by age, 

Excess morbidity, 

Mortality-all causes, Mortality-selected causes, Premature mortality 

Life expectancy, 

Self reported health/well being 

Frail aged 85+, Total aged 70+, Frail aged 70+ 

Eligible veterans 

Non-English speaking birthplace, 

Cultural diversity (fluency in English), 

Koori population 

Use of aged residential care, 

Use of disability accommodation 

Shortfall in access to aged residential care/CACPs 

Rural population density/dispersion and reduced access to HACC 

related services, 

Rural-urban fringe, 

Retirement villages, 

Accessibility/Remoteness Index for Australia (ARIA) 



Chart 2: Assessment and elimination of variables for weighting 

29 variables proposed 

8 taken into account in considering 

options for Base Population 

21 variables 

for consideration for weighting 

6 variables eliminated 

as not meeting key criteria 

and redundant/duplicative 

10 variables eliminated 

as redundant / duplicative 

and on other criteria 

5 variables identified as appropriate 

for consideration for weighting 

2.2 CRITERIA FOR ASSESSING VARIABLES FOR INCLUSION 

Given the large number of possible variables that could be selected for weighting the RREF, a 

set of criteria was developed to assess each variable. The first six criteria address issues raised 

in the consultations and submissions, and by the Reference Group, Steering Committee and 

Review team. 

They are that any variable considered for weighting in the RREF should: 

• have a demonstrated relationship to need for HACC services, on the basis of 

research findings and experience in practice; 

• be primarily an indicator of need for HACC services; 

• be available at individual LGA level, that is, the RREF has to be built “bottom-up” 

and not use variables that are generalised across all LGAs in a region and so 

obscure local variation; 

• have a sufficient range of variation to bring about a significant change in weighting 

(that is, the variable has to vary); 

• have been used in other accepted formulas, and 

• composite indexes were recognised as possibly being useful. 



As well as these criteria, two technical considerations need to be taken into account: 

• The data have to be collected systematically and be available from a reliable source; 

and 

• There is minimum duplication or redundancy with other variables. 

The first seven criteria are self-explanatory. The last criterion, assessment of duplication or 

redundancy, can be done in descriptive terms and/or statistically, and can especially assist in 

selection between alternative variables as indicators of similar aspects of need. 

2.3 ASSESSMENT OF VARIABLES 

It should be emphasised that all the variables identified in the consultations were recognised as 

having a bearing on need for HACC services, and that elimination of any variable for 

consideration for inclusion for weighting the RREF is not a denial of this relevance. Rather 

than including all possible variables however, the revised RREF has to include a careful 

selection of a smaller number of variables that are strongly related to need and that are 

statistically sound. Appropriate variables were assessed against the criteria set out above and 

identified by a process of elimination as set out in Chart 2. 

29 variables were proposed 

⇒ 6 variables were considered and adopted as options for the RREF base population. 

⇒ The residential care shortfall variable and the veteran population have also been covered 

in discussion of the base population. 

21 variables remained 

⇒ 

6 were eliminated as not meeting the key criteria of being available at LGA level, being 

available from a reliable source and / or duplication or redundancy with other variables. 

These 6 variables and reasons for elimination were: 

Retirement village residents were excluded on grounds of data not being available at LGA 

level, from a reliable source; as well as the definition of “retirement village” being problematic 

in relation to inclusion of some nursing home and hostel residents. This variable failed to meet 

most of the other criteria. Residents of retirement villages are of course included in the base 

populations as part of total LGA populations. 

Carer availability failed the criteria of LGA level data being available from a reliable source 

and also has a high level of duplication with living alone. Self evidently, those living alone do 

not have a co-resident carer, and the majority, but certainly not all, non-co-resident carers are 

able to provide less intensive support. Further, higher needs for support from services on the 

part of those living alone are counterbalanced by the needs for carer support on the part of those 

who live with or have non-co-resident carers. There is thus considerable duplication between 

the variables living alone and lack of a carer, and at the same time, having a carer and not 

having a carer both create needs for support from services. 

Take up rates of Carer Payment and Carer Allowance were excluded on grounds of 

duplication and redundancy, and apparent under-take up. Recipients of Carer Payment, which is 

means tested as an income support payment, can also receive Carer Allowance, but the level of 

take up of Carer Allowance appears to be below the level of eligible recipients. There is also 

potential for duplication between income variables and the Carer Payment. 



Self reported health/well-being was excluded because no data is available at the LGA level 

from a reliable source. 


Health status indicators accounted for five of these. Four of the indicators suggested are 

essentially alternative measures of aspects of mortality; hence there is a high level of duplication 

between them, and also with the fifth indicator of excess morbidity. It is appropriate to include 

only one health indicator for weighting in the RREF and life expectancy was considered the 

most appropriate variable as it captures the effects of excess morbidity and premature mortality 

on the dependency and therefore need for HACC services. 

⇒Life expectancy to be considered as a need variable 


Location factors accounted for a further three variables (retirement villages already being 

excluded). These were population density, access and rural-urban fringe location, and the 

Accessibility/ Remoteness Index for Australia (ARIA). The newly developed ARIA is based on 

actual travel distance from small local areas to population centres of different sizes, and so 

provides a measure of accessibility rather than just population density or straight line distance. 

ARIA is a more comprehensive and relevant indicator of need in rural areas than the measure of 

population density used in the current RREF. It defines 15 levels of access/remoteness across 

Australia, with Victorian LGAs extending across the first five levels. These five levels give a 

finer breakdown than the previous three tier rural weighting. 

⇒ 

Accessibility/Remoteness Index for Australia (ARIA) to be considered as a need 

variable 

7 variables remained, one of which was the composite index IRSED 

IRSED – the Index of Relative Socio-Economic Disadvantage is one of five Socio-Economic 

Indexes for Australia (SEIFA) and is a composite of 20 variables. IRSED has been developed 

by the ABS and is widely used in health and community services planning. IRSED is built up 

from Census data at LGA level and each LGA obtains an IRSED “score” which reflects the 

interaction of the 20 variables within the LGA. One advantage of IRSED is that it gives a 

measure of the overall social environment in which residents of any area live rather than just 

reporting individual data; thus, individuals of any given socio-economic status who live in better 

off areas will experience less disadvantage than individuals of the same socio-economic status 

who live in a worse off area because of opportunities afforded by the general social 

environment. 

The ABS stresses that IRSED should only be used when its component variables are relevant to 

the program under consideration. Many of the employment related variables in IRSED may be 

of less relevance to HACC than to programs providing assistance with training and 

employment, such as the Commonwealth State Disability Program, and it was considered that 

aspects of socio-economic status relevant to HACC would be better represented in the RREF by 

separate variables. For example, cultural diversity and the Koori population were widely 

recognised as relevant to HACC, but these two variables made relatively little contribution to 

the IRSED. The preferred option for the RREF is to use separate variables to weight for socioeconomic 

status, cultural diversity and Koori population. 



6 variables remained covering four broad dimensions of need. 

Two variables were indicators of cultural diversity: 

• fluency in English/speaking a language other than English at home 

• non-English speaking birthplace. 

As the correlation between these two variables for LGAs is .99, the choice of one or other will 

make no difference statistically. As use of a language other than English at home gives a better 

indicator of the home situation and adherence to culture, and especially the likelihood of 

needing to use interpreters or staff of the same cultural background in provision of HACC 

services, it is seen as a more appropriate indicator of cultural diversity. 

⇒ Speaking a language other than English at home to be considered as a need variable 

Three variables apart from the IRSED were indicators of socio-economic status. As well as 

socio-economic status being an indicator of reliance on HACC services, inclusion of an SES 

indicator in weighting the RREF was seen as the most appropriate way of taking capacity to pay 

fees into account. 

Median household income 

Public housing 

Take up of benefits: Disability Support Pension, Child Disability Allowance, full-rate Age 

Pension 

As only a small proportion of the population reside in public housing, household income is seen 

as a more appropriate indicator of socio-economic status as it show a wider range of variation 

across the whole population. Not only does the household income variable include those with 

low incomes in public housing but it also includes low income private renters. Further, assets 

are not taken into account, so rural areas with many households having considerable assets in 

land but low incomes record low median household incomes. 

Careful consideration was given to the choice between median household income and a variable 

based on take up of benefits. The variable to be included needs to be a broad indicator of socioeconomic 

status, which will also reflect capacity of individuals to pay fees for HACC services 

or to make choices to pay for alternative services. Five sets of factors have a bearing on the 

choice of the variable: 

• Differences in focus. In contrast to the broad eligibility criteria for HACC, the DSP 

and CDA are both highly targeted through eligibility based on both means testing and 

disability. Take up of these two benefits identifies a very small population with a high 

level of need on both these grounds, but this stringent definition excludes those disabled 

individuals whose parents or partners have income in excess of mean test limits. 

Inclusion of full-rate Age Pensioners only excludes part pensioners who have some 

level of handicap and who would pay only limited fees for HACC services. 

• Eligibility for DSP and CDA is based on handicap, and so eligible individuals are 

covered by the definition of handicap used in DACS. Research commissioned by the 

DHS Disability Program reports that DACS data correspond much more closely with 

the program client population than DSP and CDA beneficiaries. As DSP and CDA are 

both means tested, there is duplication with income variables. Both also have age limits 

and other eligibility criteria and so do not cover the whole population consistently. 



• Stability. A variable based on take up of one or a combination of benefits is subject to 

instability arising from changes to eligibility conditions, and a degree of substitution 

between different benefits that individuals can receive; abolition of the Mature Age 

Allowance for example diverted beneficiaries to DSP or unemployment benefits. There 

is also the prospect of considerable welfare reform in the next 12 to 18 months. The 

short term and longer term instability make projection on the basis of a benefit based 

variable particularly problematic 

• Quality of data. While a statewide data set suitable for use in the RREF would be 

available at suitable intervals, there are issues of quality of a data set that has to 

combine data from all Centrelink offices, and from different benefit payment systems. 

Assembling such a data set involves considerably more computation and hence risk of 

error, and would be very difficult for others to replicate. 

• Close correlation. The relationship between median household income and the 

proportion of residents in each LGA in receipt of DSP and the full rate age pension was 

tested by correlation. The result of .79 shows that the population in receipt of benefits 

is distributed between LGAs in accord with median household incomes. In making the 

choice between median household income or a variable based on benefit take-up, it has 

to be remembered that either will serve to rank LGAs from high to low on the basis of 

their relative socio-economic status. 

⇒ Median household income is the preferred option for the socio-economic indicator. 

1 variable remained 

These two single variables were both identified in the consultations, and both remain for 

consideration as variables for weighting the RREF. 

⇒ Koori population to be considered as a need variable 

2.4 OPTIONS FOR CONSIDERATION FOR NEED VARIABLES 

The process of elimination and selection between alternative variables resulted in identification 

of five possible need variables for weighting the RREF in addition to those included in the Base 

Populations. The Consultations sought views on these options. 

What are the • Have the final range of variables adequately addressed your concerns 


about factors for inclusion in the RREF? 

variables for • Of the 28 variables identified from consultations for possible inclusion 

weighting the for weighting the RREF, 12 have been taken into account: 

RREF? 1 1. 7 considered in base population options 

2. 5 identified as appropriate for consideration in weighting the RREF: 

3. Socio-economic status: Median household income 

4. Health indicators: Life expectancy 

5. Cultural diversity: Use of a language other than English at home 

6. Koori population 

7. Location factors: Accessibility/Remoteness Index of Australia 

(ARIA) 

1 : Residential care shortfall was initially included as a need variable in the Options Paper but the issues raised and 

their resolution has been dealt with in Section 1.8 



2.5 FURTHER ISSUES AND PREFERRED OPTIONS FOR NEED VARIABLES 

• No further variables were identified for inclusion in the RREF on a statewide basis but 

the need to take account of factors such as development of retirement villages in 

regional and local planning was reiterated. 

• Each of the proposed variables was reviewed in the consultations and clarification on 

some aspects of particular variables was provided, mainly by reference back to details 

in the Options Paper. It was emphasised that the variables drawn from Census data 

would all be updated following the 2001 Census. 

• There was considerable interest in maps of the variables presented in the Round 2 

Consultations; rather than showing a rural-urban divide, the maps highlighted the extent 

of variation within rural and urban regions on all the variables; these maps are included 

in the profile of variables presented below. 

• The discussion of the variable Service system factor: Shortfall in aged residential care 

places has been detailed above. 

• There was no change in three further variables: 

Socio-economic status: Median Household Income 

Cultural Diversity: Language other than English spoken at home 

Location factors: Accessibility/Remoteness Index of Australia (ARIA) 

• Changes were canvassed for the two remaining variables: 

Koori Population 

Health Indicator: Life expectancy 

• Two comments were made on the Koori population: 

1. Undercounting of the Koori population was noted in the Options Paper and 

reiterated in the consultations. Comparison of the results of the forthcoming 

2001 Census with the number and age distribution of the Koori population 

reported in the 1996 Census will give some indication as to whether this 

problem has been moderated. 

2. As the Koori population is small in total and very unevenly distributed across 

the state, it was proposed that the number of Kooris in each LGA rather than the 

proportion they comprised of the total LGA population would provide a better 

indicator of the impact on the service system. Further analysis of this 

alternative approach showed a “swings and round abouts” effect, and for other 

technical reasons, the use of the proportion Koori in LGA populations is 

preferred. Other issues of Koori service delivery also need to be addressed 

through regional and local planning and on-going service development 

initiatives. 

• There was strong support for inclusion of a health indicator, and discussion focused on 

the choice between Life Expectancy and one of the measures developed in the DHS 

Burden of Disease study. Points considered in resolving this issue were: 

1. The question that arose with regard to the selection of life expectancy was 

whether higher or lower life expectancy indicated an increased need for HACC 

services. The ambivalent nature of this relationship was canvassed in the 

Options Paper. 



2. The relationships between premature mortality, poorer health status and higher 

levels of activity restriction, and the need for HACC services have been 

demonstrated in the AIHW reports on health differentials among older 

Australians (Mathers, 1990). While there is close relationship between median 

household income and life expectancy, inclusion of a separate health indicator 

is considered preferable to simply doubling the socio-economic status variable 

as it captures a somewhat different perspective on need and draws on a different 

source of data than the Census. 

3. The Burden of Disease Study (DHS, 2001) provides four measures of Disability 

Adjusted Life Years (DALY), Disability Adjusted Life Expectancy (DALE), 

Years of life Lost (YLL) and Healthy Years of Life Lost to Disability (YLD). 

Discussion with staff involved in the Burden of Disease study identified YLD 

as the most appropriate measure for inclusion in the RREF as it measures the 

years of healthy life that are lost to disability associated with chronic disease 

separately to mortality. The impact of chronic disease is measured as the years 

of life spent living with a chronic condition rather than in terms of reduced life 

expectancy. The major diseases contributing to YLD are depression, dementia, 

osteoarthritis, asthma, diabetes mellitus, breast cancer, stroke, chronic 

obstructive pulmonary disease, and ischaemic heart disease, as well as sight and 

hearing loss. These conditions are readily recognised as characterising the 

HACC target population and correspond closely with the conditions causing 

activity restrictions as defined by the ABS. 

4. At the LGA level, the high inverse correlation between YLD and life 

expectancy (-.71) shows that YLD is associated with premature mortality and 

the inverse correlation with median household income (-0.67) shows that higher 

YLD is also associated with lower socio-economic status. The lower 

correlation of YLD and DALYs for all age groups (0.48) compared to older age 

groups (0.53) reflects the difference in the focus of YLD on the prevalence of 

non-fatal chronic disease whereas the DALY also reflects fatal conditions. 

5. Inclusion of YLD as developed in the Burden of Disease study in the RREF 

will be the first use of the study results in a resource allocation tool in Victoria. 

Continuing development of the Burden of Disease measures will provide for 

review of YLD in the future. 

2.6 RESOLUTION OF NEED VARIABLES FOR INCLUSION IN RREF 

Of the six need variables initially presented as options for inclusion in the RREF, the residential 

care shortfall has been set aside and the five variables remaining to be included in the RREF as 

need variables are: 

1. median household income 

2. years lived with disability 

3. access and remoteness as measured by the ARIA 

4. language other than English spoken at home 

5. Koori population as a proportion of each LGA population. 

Profiles of these variables are presented at the end of Part B of the <strong>Report</strong>. 

Models of resource allocations under the RREF using these five need variables and base 

populations 2 and 3 are presented in Step 7. 



Availability of high quality data was a criterion for selection of need variables for inclusion in 

the RREF and the data used is the best currently available. Further development of measures of 

disability, burden of disease and refinement of the ARIA as a measure of access may lead to 

inclusion of other variables in future as well as updating with data from the next Census and 

next DACS. Improvements in the enumeration of the Koori population in the next Census 

would also have an impact on this variable. 

STEP 3: OPTIONS FOR SCALING NEED VARIABLES 

3.1 NEED FOR A STANDARD RULER FOR DIFFERENT VARIABLES 

Trying to take account of the effects of the six variables identified as indicators of the need for 

HACC services is an “apples and oranges” task. For example: 

• how can the effect of having 50% of the population in one LGA speak a 

language other than English at home be compared to the effect of remoteness 

on another LGA that is 300 km from Melbourne? 

• how can the effect of a concentration of Koori population in a rural LGA be 

compared to the effect of remoteness on delivering services to all who need 

services in the same area? 

• how can the effect of low incomes in an outer suburban LGA be compared with 

the effect of a high proportion of the population in the same LGA speaking a 

language other than English at home? 

This “apples and oranges” problem is commonly solved by scaling the variables on the same 

scale. By using the same “ruler”, scaling preserves the relative position of each LGA, but fits 

the different distribution on each variable to the same scale. 

Scaling involves dividing the distribution of each variable into 10 categories or deciles that each 

span an equal interval of the total range of the variable. All variables are ranked so that a high 

value indicates a high need for HACC services. Each LGA is then given a score corresponding 

to the decile in which it falls. The LGAs that are in the lowest decile on any variable get a score 

of 0 and will not get any weighting for that variable. Conversely, all LGAs in the top decile get 

a score of 9 and so get a high weighting for that variable. 

Scaling in this way accords with the RREF allocating resources on the basis of relative need as 

it ranks LGAs by relative need on each variable. By rating all LGAs between 0 and 9 on all 

variables, each variable is scored as having equal relative weight. Thus, not only is there a 

relativity between the scores 0 to 9 on any one variable, but a score of say, 5 or 9 on any one 

variable carries the same weight as a score of 5 or 9 on all the other variables. Thus, following 

on the examples above: 

• the LGAs with the highest proportion of people speaking a language other than 

English at home, around 50%, receive a scaled score of 9; 

• the most remote LGAs which have ARIA indexes around 5, also get a scaled 

score of 9; 

• the LGAs with the highest proportions of Kooris in their populations, about 

3.5%, receive a scaled score of 9; and 

• the LGAs with the lowest median incomes receive a scaled score of 9. 



The scaled scores on the different variables can be added together to give a combined score for 

each LGA. In a RREF option with 6 variables, the maximum score for any LGA would be 54; 

with 4 variables, it would be 36. The combined score for each LGA can then be readily 

expressed as a percentage of the maximum possible score. 

Statistical transformation is a second method of standardising scores to a mean of 100 and a 

specified standard deviation. This method preserves the relative position of each LGA, but 

produces different results for variables where the distributions are skewed in different ways. In 

the case of most of the variables under consideration for weighting the RREF, there is no need 

to transform the distributions. This option is also less transparent and actual values of data for 

LGAs are obscured at an earlier stage in the scaling and weighting process. 

3.2 OPTIONS FOR SCALING NEED VARIABLES FOR INCLUSION IN THE 


The options for scaling the variables identified for inclusion in the RREF are summarised 

below. The Consultations sought views on these options. 

What are the 


scaling the 

variables 

Do the 

rationales for 

inclusion set 

out in the 

profiles of 

variables 

cover all 

relevant 

issues? 

• Scaling variables into deciles and scoring 0 to 9, from lowest to 

highest need, is the identified option. 

• Each LGA to receive a score on each variable to reflect relative 

need 

• Do you agree with the rationales for inclusion of median 

household income, language other than English spoken at home, 

Koori population and ARIA as weighting variables? 

• As Life Expectancy correlates highly with median household 

income, and because of the ambivalent relationship of Life 

Expectancy to need for HACC services, should Life Expectancy 

be included as a variable? 

• Should the shortfall in residential care be included as a variable 

for weighting, based on operational rather than approved beds? 


Using a scale from 0 to 9 was accepted as providing a common ruler for all the need variables 

Scaled scores of LGAs on individual variables were seen to accord with views of need in the 

field. 

There was very keen interest in having access to these data for use in regional planning, with 

data on these basic need indicators to be combined with more local quantitative data, including 

data from the HACC MDS, and qualitative information. 

3.4 RESOLUTION OF SCALING OF NEED VARIABLES 

Scaling the five need variables 0 to 9 was adopted as the preferred option. 

The data on need variables and the scaled scores is included in Appendix 3 and is to be made 

available by DHS for use in regional planning of HACC services. 


Step 4: Options for weighting need variables 


4.1 WEIGHTING OF NEED VARIABLES IN RELATED FORMULAS 

Weighting to take account of the relative effects of different variables is one of the most 

difficult tasks for any resource allocation formula. Ideally, the effect of each variable on overall 

need would be assessed through statistical analysis of the relationships between the variables 

and a summary measure of need, or at least the cost or time of service required to meet need. 

The following examples demonstrate how different formulas have dealt with this issue. 

In the Resident Classification Scale 

The relationship between a number of resident characteristics that affect need for care and the 

cost and time inputs from care staff has been analysed and each question on the RCS carries a 

different weighting that reflects its effect on care needs. Each resident then receives an RCS 

score that takes account of their care needs, as measured and weighted by the questions on the 

RCS score. 

No such summary measure of need for HACC services is available by LGA however. No 

measure of need for post acute services was available for the development of the Post Acute 

Care Resource Allocation Model, nor was a measure of need for disability services available for 

the Disability Program resource allocation formula. Instead, as with the 1992 RREF, these two 

formulas have adopted arbitrary weightings on the recommendation of advisory groups involved 

in developing the formula. 

In the 1992 RREF 

• The only weighting was for rurality. 

• While density of population was measured, the decision to weight this variable by 

10, 20 or 30% was essentially an arbitrary response to the view that rurality affected 

the need for services, but there was no clear evidence that did so by a factor of as 

much as 30%. 

• Although most of the LGAs in rural Victoria received the full 30% weighting, the 

effect on overall resource allocation was only 6.8% as these LGAs accounted for 

only a small share of the total RREF base population. 

In the PACRAM 

• The PACRAM Reference Group recognised that older age and socio-economic 

status affected the need for post acute services 

• The decision was made to double the weighting for these two variables in the 

PACRAM formula. However, there was no clear evidence to say that the two 

variables should be given the same extra weight or that they should be given twice 

as much weight as all the other variables. 

In the Disability Program 

• The Disability Program formula applies only to the population to age 65. 



• The weight for the Koori population is doubled as the Commonwealth provides 

double the per capita funding for the Koori population in each state; 

• The five non-metropolitan regions get a rural weighting of 5%, an arbitrary 

decision; 

• The two regions of greatest socio-economic disadvantage, as measured by the 

IRSED, are weighted by 10%; the decision to give these regions a weighting 

recognises the effect of socio-economic disadvantage on need for disability 

services, but the decision to weight only two regions, and both by 10%, is arbitrary. 

4.2 PRINCIPAL COMPONENTS ANALYSIS 

In considering options for relative weighting of the variables, the RREF Review undertook a 

principal components analysis (PCA). PCA can provide an indication of the contribution that 

each variable makes to the total variation among all the variables when they are considered 

together. PCA is especially useful when there are a large number of possible contributory 

variables and the impact of each is not readily apparent. 

PCA was carried out to test the relationships between five of the weighting variables. The 

ARIA was excluded as in preliminary analysis it was found to swamp the effect of all other 

variables. The residential care shortfall variable was also excluded as it did not correlate with 

any of the other variables and so did not contribute to any component. Two principal 

components were identified: 

1. The two variables that contributed most to the first component were median 

household income and life expectancy. High correlation between these two 

variables indicated a substantial overlap and rather than using this first 

component in the RREF, the preferred option is to use each separately and to 

model one option including both variables and one including median household 

income only. 

2. The two variables that contributed most to the second component were Koori 

population and population speaking a language other than English at home. 

The contributions of these variables were inversely correlated, and it can be 

concluded that each contributes to the component in a different way and that 

including each in the RREF as a separate variable has a similar effect to 

including the second component. 

The first component explained 50% of the total variance and the second component 25%. 

Inclusion of the three variables that contributed strongly to the two principal components - 

median household income, cultural diversity and Koori population - in the RREF captures a 

large proportion of the total variance. The component loadings did not however give any clear 

guidance that any one variable should be weighted more than the others. 

4.3 EXPERT ADVICE 

Expert advice was received from both the Departmental Steering Committee and the wider 

Reference Group of representatives of provider and consumer groups. These two groups 

brought together a wide range of statistical skills and practical experience in the field. 



Both groups considered that the range of variables that had been considered had covered the 

main factors affecting need for HACC services and that inclusion of six variables in the base 

populations and six need factors for weighting would give appropriate recognition to these 

factors in the RREF. 

With regard to grounds for weighting any one of these variables more than another, the expert 

opinion was that options should be modelled to illustrate the effects of weighting, with the 

unadjusted variables providing the basis for comparison. 

4.4 EFFECTS OF WEIGHTING OF VARIABLES 

There are a variety of options for weighting variables and it was considered useful to model 

some options for the RREF without adjusting the weighting of need variables and to provide 

examples with adjusted weightings to demonstrate the impact of such adjustments. 

With unadjusted weighting, the contribution that each variable makes to the overall outcome 

reflects the distribution of scores across LGAs. For all variables, the highest need LGA gets a 

score of 9, and the lowest get a score of 0, but variable A on which a large number of LGAs get 

a low score and a few get a high score will have less impact overall than variable B on which a 

large number of LGAs get a high score and a few get a low score. 

If it is considered that variable A has a markedly stronger impact on the need for HACC 

services than variable B, there may be grounds for adjusting the weighting for variable A to take 

account of this relationship. Reasons that might be considered for varying the weighting of 

different variables were canvassed in the Consultations and are noted below. 

Modelling of options with and without adjustments to the weighting of the need variables is 

useful for illustrating the effects of varying the weighting between variables. It should however 

be noted that the effects of changing the weighting of any one variable are constrained as the 

weightings for all variables have to total 100%. Increasing the weighting of one variable thus 

reduces the weighting of others; for example, in a five variable model in which each variable 

happened to contribute 20%, doubling of one variable would increase that variable to 33% and 

reduce the other four to 16.6% each. 

4.5 OPTIONS FOR CONSIDERATION FOR WEIGHTING OF NEED 

VARIABLES 

The Options Paper illustrated two sets of options for adjusting the weightings of the need 

variables, by way of (1) reducing the number of variables to be included in the RREF from 6 to 

4, and (2) by doubling the weighting of some variables. The Consultations sought views on 

these options. 

What are the 


weighting the 

variables? 

• Should all variables evenly weighted? 

• Which if any of the variables should be weighted more than 

others, and for what reasons? 




Two aspects of differential weighting of the need variables were canvassed 

in the consultations: 

1. views as to the variables that warranted greater weight on the basis of 

making a greater contribution to need for HACC services, and 

2. the actual weight that each variable contributed to the model. 

Variables warranting greater weighting 

Participants in the Round 2 consultations expressed the view that some variables were seen to 

have a greater bearing on need than others. The two variables that were most widely seen to 

warrant more weight were rurality and socio-economic status, each identified in around 40% of 

responses, followed by the health indicator and the residential care shortfall variable, each 

identified in around 20% of responses. Only a minority of responses, around 10%, identified 

cultural diversity and the Koori variable as warranting additional weighting. 

At the same time, it was recognised that there were no clear empirical grounds for adjusting the 

weightings and it was noted that any weighting based on arbitrary decisions would complicate 

the process; even those who favoured giving additional weighting to some variables commented 

that the process was imprecise. The option of further statistical modelling beyond the principal 

components analysis already carried out was precluded by the lack of a measure of need that 

could be used as the independent variable in methods such as regression analysis. 

Actual contribution of variables to model 

The scaling of all variables from 0 to 9 treats each variable as having an equal relationship to 

need for HACC services. This equal treatment or equal weighting does not however mean that 

each variable does in fact make the same contribution to overall need. The contribution that 

each variable makes depends on the distribution of LGAs across the range of scores from 0 to 9. 

A variable on which many LGAs receive a high scaled score will make a greater contribution to 

the overall outcome than one on which only a few LGAs have a high scaled score and most 

have lower scores. 

Thus, as a large number of LGAs have a relatively high scaled score on median household 

income, reflecting low socio-economic status, this variable contributes a large part of the overall 

model. Similarly, a large number of LGAs receive a relatively high YLD and ARIA scores. In 

contrast, only a small number of LGAs have a high proportion of their population that is Koori 

and many LGAs receive a low scaled score on this variable. 

The contribution that each variable makes to the revised RREF model is shown in Table 4.1 in 

which the total points that each variable actually contributes are also expressed as a percentage 

of the actual total of 1293. 

Even without any further adjustment to take account of perceived relationships to need, it is 

evident that each variable makes a different contribution to the overall model and so carries a 

different weight. Thus, the Household Income variable contributes 494 points, 38.2% of the 

total actual points, while the cultural diversity variable contributes 136 points and 10.5% of total 

need. Given these differences, it may be more appropriate to refer to “unadjusted” weightings 

rather than “even” weightings. 



The overall effect of doubling the two selected variables is shown in Table 4.1, but the impact 

on regions is affected by the distribution of the scores on these variables across LGAs and the 

size of the LGA populations to which the adjusted weightings apply. 

Table 4.1: Contribution of need variables to overall need weighting in five 

variable model 

Contribution to 

overall need 

weighting 

Median 

H’hold 

Income 

Years 

Life 

Disability 

ARIA 

Cultural 

Diversity 

Koori 


Total 

Unadjusted: 

Total Score 494 387 209 136 67 1293 

% contribution 38.2 29.9 16.2 10.5 5.2 100.0 

Doubling of Median 

H’hold Income 

Total score 988 387 209 136 67 1787 


Doubling ARIA 

Total score 494 387 418 136 67 1502 


Impact of adjusting weightings 

The household income variable already carries the greatest weight in the model, followed by the 

health indicator. Doubling the weight for the household income variable increases the total 

actual points to 1787 and increases the contribution of this variable to 55.3%, but as shown in 

Table 4.1 above, the weightings for all the other variables decrease. 

The Round 2 Consultations attached considerable importance to inclusion of the separate health 

indicator and as it was seen as a candidate for increased weighting, it is seen to be more 

appropriate to include the two separate variables, which together contribute 68.1% of the total 

need weighting in the revised model, than to double the income variable and exclude the health 

indicator. With doubling of the socio-economic variable, it together with the health indicator 

account for 77% of the total need weighting. 

The ARIA contributes the third highest weight to the overall model, 16.2%. Doubling the 

ARIA suggests that its contribution to the overall model increases to 27.8%, but the size of the 

base populations in LGAs to which the increased weighting is applied is an important factor in 

determining the actual outcome for regions. Whether adjusted or not, the weightings for rurality 

as the single need variable in the current RREF cannot be compared with the weightings for the 

ARIA as one of several variables in a multi-variable model. 



Extensive modelling reported in the Options Paper indicated that doubling the ARIA did not 

bring about a significant change in overall outcomes as the additional weighting applied 

generally to only small rural populations. While the consultations identified rurality as a factor 

warranting additional weight, it was also recognised that increases in resource allocation 

flowing on from increased weighting of the ARIA in the RREF would result in higher 

performance targets for rural service providers rather than addressing the additional costs of 

service delivery associated with greater travel distances. It is seen as preferable to address these 

cost issues through other measures rather than increasing the weight of the ARIA in the RREF 

model, and this issue is discussed further in Part D of the <strong>Report</strong>. 

4.7 RESOLUTION OF OPTIONS FOR WEIGHTING OF NEED VARIABLES 

Given the five variables make different contributions to the overall need weighting, reflecting 

the distribution of the scaled scores across LGAs, RREF options are prepared first without any 

further adjustment to weightings. 

To demonstrate the effects of adjusting weightings for selected variables, and to present a wider 

range of options for a revised RREF, models are also prepared in which the weightings for the 

socio-economic status variable: median household income, and the rurality variable: the ARIA, 

are doubled. 


Profiles of Need Variables 


This section presents a profile of each of the five need variables. Each profile covers: 

• Full variable name and sources of data 

• A brief discussion of the main issues taken into account in the decision to include the 

variable, including issues of data availability and measurement; 

• A tabulation of scaled scores on each variable: this data is set out in full in Appendix 3 

which detailed LGA scaled scores on each of the five variables; and 

• A map of each variable by LGAs; note that the variables are plotted on the maps in five 

categories, so that each category corresponds to two of the categories used in scaling the 

variables. 



VARIABLE 1: MEDIAN HOUSEHOLD INCOME - MHHY 

Data Source: 

Census, updated every five years 

Issues: 

• Median household income (MHHY) reports the middle weekly income level for each 

LGA, that is, 50% of households in the LGA have a higher income and 50% have a 

lower income. Each LGA thus has a different median income. 

• This variable has been reversed as a weighting variable, so that LGAs with the lowest 

incomes score 9, and receive the highest weighting, and those with the highest incomes 

score 0 and receive no weighting. 

• The distribution of incomes by LGAs is skewed, with only 5 LGAs in the three lowest 

deciles (high income), 27 in the middle four deciles, and 46 in the three highest (low 

incomes). 

• As a large number of LGAs receive a high or moderate weighting on MHHY, weighting 

for MHHY has a major effect in redistribution of growth funds. 

• A large number of LGAs receive a high or moderate weighting on MHHY. 

Variable 1: Median Household Income 

Decile score Income $ per week No of LGAs % of LGAs 

0 922.601-980.000 1 1.28 

1 865.201-922.600 2 2.56 

2 807.801-865.200 2 2.56 

3 750.401-807.800 5 6.41 

4 693.001-750.400 8 10.26 

5 635.601-693.000 9 11.54 

6 578.201-635.600 5 6.41 

7 520.801-578.200 13 16.67 

8 463.401-520.800 22 28.21 

9 406.001-463.400 11 14.10 

Minimum $406 Bass Coast 

Median $546.5 Wangaratta, 

Darebin 

Maximum $980 Nillumbik 

Range $574 




VARIABLE 2: HEALTHY YEARS OF LIFE LOST TO DISABILITY – YLD 

Data Source: 

Disease Study 

Victorian Department of Human Services, Burden of 

Issues: 

• Healthy years of life lost to disability (YLD) is included as the measure of health status 

that is most relevant to HACC services as it captures the burden of chronic disease on 

well-being and functioning. YLD is reported as the rate at which years of healthy life 

are lost to disability per 1000 population in each LGA, so that a higher YLD represents 

a greater burden of disease in terms of more years of healthy life being lost to disability. 

• YLD is seen to be the most appropriate of the four measures of the Burden of Disease 

developed by DHS as it concentrates on the impact of chronic disease separately to 

mortality whereas the other three measures of Life Expectancy (LE), Disability 

Adjusted Life Years and Disability Adjusted Life Expectancy all included some 

measure of mortality. 

• YLD especially avoided the difficulty of interpreting the ambivalent relationship of LE 

to need for HACC services that posed a problem for scaling scores. It can be argued 

that areas with low LE experience higher rates of disability and hence have an increased 

need for HACC services associated with premature mortality, but at the same time, 

LGAs with very high LE can argue the need for more HACC services on the grounds of 

having more very old people. 

• The high but inverse correlations between the raw scores for LGAs for YLD and 

median household income (-0.67) and with life expectancy (-0.71) show that the 

variables measure related but somewhat different dimensions of well-being. 

• YLD is a normally distributed variable, with 5 LGAs in the two lowest and two highest 

deciles. 

• The chronic conditions that contribute most to the burden of disability in YLDs are 

depression, dementia, arthritis, asthma, diabetes, respiratory disease, stroke and 

ischaemic heart disease, and breast cancer for women. These conditions are readily 

recognised in the HACC target population. 

• The development of YLDs to date has been fully reported in the Victorian Burden of 

Disease Study (DHS, 2001). The proposed use of YLD in the RREF would be the first 

applied use of this work in a resource allocation formula, and the measure could be 

reviewed in future as the work on Burden of Disease proceeds. 



Variable 2: Healthy Life Years Lost to Disability 

Decile score Years of healthy life No of LGAs % of LGAs 

0 53.705-55.013 2 2.56 

1 55.014-56.321 3 3.85 

2 56.322-57.630 4 5.13 

3 57.631-58.938 5 6.41 

4 58.939-60.246 14 17.95 

5 60.247-61.554 21 26.92 

6 61.555-62.862 10 12.82 

7 62.863-64.170 14 17.95 

8 64.171-65.478 3 3.85 

9 65.479-66.786 2 2.56 

Minimum 53.705 Manningham 

Median 61.391 Wangaratta, Delatite 

Maximum 66.786 Hume 

Range 13.081 




VARIABLE 3: CULTURAL DIVERSITY: % OF POPULATION IN LGA SPEAKING 

A LANGUAGE OTHER THAN ENGLISH AT HOME 

Data Source: 

Census, updated every 5 years 

Issues: 

• There is a widespread perception and experience in service delivery that points to 

cultural diversity being associated with increased need for HACC services, due to health 

and disability status, strength of family roles and hence need for carer support, need for 

interpreters and other factors that increase hours of service that have to be provided. 

Cultural diversity is thus a need factor as it leads to additional hours of service inputs as 

much as extra costs per hour of service. 

• Cultural factors pose barriers to use of residential care and as a result, more of the frail 

older people from these backgrounds remain in the community, and to higher levels of 

dependency, and thus require higher levels of service. Only 9% of those in residential 

care in Victoria had a preferred language other than English, compared to 17% of the 

population born in a non-English speaking country. 

• This lower use of residential care is important in interpreting the HACC User Data that 

show those born overseas are represented among HACC clients in proportion to their 

share of the population. The HACC data are a simple count of clients using any service 

and do not show adequacy of services used in relation to cultural appropriateness or 

level of service needed. The level of services used is especially constrained where 

communities do not have access to services such as day care that offer relevant social 

and cultural support. These factors together with higher levels of dependency 

associated with lower use of residential care means that these groups need a share of 

HACC resources that is above that indicated by their numeric representation in the 

population. 

• 22% of Victoria’s population speak a language other than English (LOTE) at home; 

cultural diversity thus has the potential to have a substantial impact on need for HACC 

services. 

• Cultural diversity differs very markedly from LGA to LGA and presents HACC 

services with very different needs in different areas. In 42 LGAs, less than 8% of the 

population speaks a language other than English at home, and these LGAs receive no 

weighting. 

• The impact of cultural diversity on weighting is greatest in the small number of LGAs 

in which high proportions of the population speak a language other than English at 

home; in 10 LGAs, this proportion was over one third of the population. 



Variable 3: Cultural Diversity 

Decile score % speaking LOTE No of LGAs % of LGAs 

0 2.66-7.80 42 53.85 

1 7.81-12.93 11 14.10 

2 12.94-18.07 4 5.13 

3 18.08-23.20 5 6.41 

4 23.21-28.33 3 3.85 

5 28.34-33.46 3 3.85 

6 33.47-38.60 4 5.13 

7 38.61-43.82 0 0 

8 43.83-48.86 3 3.85 

9 48.87-54.00 3 3.85 

Minimum 2.66 Moyne 

Median 7.35 Hepburn, Bass Coast 

Maximum 53.99 Brimbank 

Range 51.33 




VARIABLE 4: KOORI POPULATION - % OF LGA POPULATION IDENTIFYING 

AS KOORI 

Data Source: 

Census, updated every 5 years 

Issues: 

• The lower health status of Koori people has been widely documented. Many of these 

health problems are associated with chronic diseases, with Koori people experiencing 

earlier onset and more severe levels of illness and resulting disability than the rest of the 

population. For example, diabetes, heart disease and stroke are more common at early 

ages among the Koori population and all give rise to on-going need for nursing, 

personal care and allied health care and associated disability gives rise to a need for 

further assistance in activities of daily living. 

• Many Kooris require complex care and packages of services; these needs add to the 

volume of service required. 

• Recruitment and training of Koori staff and small scale of agencies serving Koori 

clients may also add to costs and are more appropriately dealt with through service 

development grants. 

• The Koori population accounts for approximately 1% of Victoria’s total population, but 

it is widely considered that Koori identity is under-reported. The post census count 

increased the number of Kooris in Victoria by some 3000, an increase of around 16%. 

• The Koori population is very unevenly spread across the state. A large number of 

LGAs have very small Koori populations; the 41 LGAs in the lowest decile receive no 

weighting for Koori population. 

• Only 3 LGAs have more than 2% Koori population and receive high weightings. These 

are all rural LGAs and have small total populations, so while the overall impact of 

weighting for Koori population on the redistribution of growth funds will be small; it 

will be responsive to localised need. 

• Consideration was given to using the number of Kooris in each LGA rather than the 

percentage share of the population. While the ranking of LGAs on both measures 

corresponded closely, use of absolute numbers meant that more LGAs received a higher 

scaled score and the contribution of the Koori variable to the total model increased to a 

level equal to the cultural diversity variable; this outcome was seen to be 

disproportionate to the relative size of the Koori population and the population from 

culturally and linguistically diverse background. Use of percentage shares was 

therefore adopted, and gave consistency with other variables. 



Variable 4: Koori Population 

Decile score % Koori No of LGAs % of LGAs 

0 0.096-0.449 41 52.56 

1 0.450-0.802 26 33.33 

2 0.803-1.155 6 7.69 

3 1.156-1.507 1 1.28 

4 1.508-1.860 1 1.28 

5` 1.861-2.212 0 0 

6 2.213-2.565 1 1.28 

7 2.566-2.918 1 1.28 

8 2.919-3.270 0 0 

9 3.271-3.623 1 1.28 

Minimum 0.096 Manningham 

Median 0.422 Corangamite, Greater Dandenong 

Maximum 3.622 Swan Hill 

Range 3.526 




VARIABLE 5: ACCESSIBILITY AND REMOTENESS INDEX FOR AUSTRALIA - 

ARIA 

Data Source: Commonwealth Dept. of Health and Aged Care and 

Centre for Social Applications of Geographic Information Systems 

Issues: 

• Individual LGA scores on ARIA replace the 3 tier rural density weighting in the 1992 


• The 15 level ARIA provides a very discerning measure of accessibility and rurality 

across the whole state. The way the Index is constructed, using a grid of local areas 

smaller than LGAs, captures travel distance to centres of difference sizes and so gives a 

good indicator of access to services that locate only in centres above certain sizes, such 

as Aged Care Assessment Services. It is a much more effective “real-world” measure 

of rurality than the arbitrary measure of density used in the 1992 RREF. 

• ARIA does not simply average the density of population across LGAs, but measures 

travel distance to centres of different sizes. A non-metropolitan LGA in which most of 

the population was located in a large provincial centre would rank as more accessible 

than an LGA with the same population but dispersed more evenly across the whole area. 

• Accessibility and remoteness is included as a variable associated with need for higher 

levels of service among the rural population, due to health status and limited access to 

alternative services, such as private allied health and social support services. 

• As performance targets are based on the level of funding made available through the 

RREF, any additional funding through the RREF lead to a higher performance target 

and so did not take account of higher costs associated with travel and other factors. 

• Low ARIA scores indicate low remoteness/high accessibility, and high scores show 

high remoteness/low accessibility. 

! 24 LGAs comprising the inner and middle distance suburbs of Melbourne have 

ARIA scores of 1 and so are scored 0 and receive no weighting. 

! urban fringe LGAs are well differentiated and have higher ARIA scores and so 

receive some weighting. 

! rural LGAs in which large provincial centres are located have higher accessibility to 

these centres and are less remote than more distant surrounding LGAs and so 

receive lower weightings. 

! the most distant and least accessible parts of the state receive the highest weighting. 



Variable 5: Accessibility and Remoteness – ARIA 

Decile score ARIA Score No of LGAs % of LGAs 

0 0.00-0.55 24 30.77 

1 0.56-1.11 9 11.54 

2 1.12-1.67 10 12.82 

3 1.68-2.23 9 11.54 

4 2.24-2.79 9 11.54 

5 2.80-3.35 3 3.85 

6 3.36-3.91 7 8.97 

7 3.92-4.47 0 0 

8 4.48-5.03 3 3.85 

9 5.04-5.60 4 5.13 

Minimum 0 16 LGAs 

Median 1.37 Macedon Ranges 

Hepburn 

Maximum 5.59 Hindmarsh 

Range 5.59 



PART C: OUTCOMES 

The Options Paper presented results for modelling the RREF in three steps as set out in Chart 3 

below. A number of issues were raised in the Round 2 consultations and this section reports on 

those discussion and presents revised outcomes for Step 5,6 and 7, incorporating the preferred 

options identified in Steps 1-4 and reference is made to marked differences between these 

revised outcomes and the initial outcomes where relevant. 

Chart 3: Modelling of Options 

STEP 5: OUTCOMES OF OPTIONS 

FOR 

STEP 6: REGIONAL OUTCOMES OF 

WEIGHTING FOR NEED VARIABLES 

5.1 Base population options 

compared to current RREF 

5.2 Projections to 2006 

< OPTIONS > 

6.1 Regional Outcomes 

compared to current RREF 

STEP 7: OPTIONS FOR REGIONAL ALLOCATION OF 

GROWTH FUNDS 

7.1 Changes in overall allocations 

7.2 Changes in Regional Allocations 

< OPTIONS > 

7.3 6 and 4 variable models 

7.4 Even or different weighting 

OUTCOMES FOR REVISED RREF 

INCORPORATING PREFERRED OPTIONS 


Part C: Outcomes 

In the initial modelling, all data sets were compiled at LGA level before being aggregated to the 

regional level, and LGA level data were retained in all the revised modelling. The size of these 

data sets and the complexity of modelling is again emphasised: 

• there are 78 LGAs in Victoria; 

• there are 20 age groups in each LGA; 

• each with a different age-specific rate of handicap; 

• each LGA is scored for five variables; 

• projections are then made for each LGA to take account of total population growth and 

changes in age structure, and consequent changes in handicap over the period 2002- 

2006; 

• the current RREF and three further base population options are modelled, with 

modifications made to two of the base population options in revised modelling; 

• initial options were modelled with six variables and with only four variables, and 

• the effects of giving double weighting to selected variables are also modelled for the 

initial and revised options. 

All modelling has been carried out independently by the two members of the Review Team with 

statistical and actuarial skills and then cross-checked. Small differences will however remain 

due to rounding and other mathematical aspects of data processing 

The revised results presented in the next steps should not be taken as final. Even when a 

decision is made on the RREF that is to be used in future, new data may become available and 

further refinements made before any revised RREF is implemented. 



Step 5: Outcomes for Base Population Options and Projections 

5.1 FACTORS AFFECTING OUTCOMES 

Initial outcomes for modelling three base populations were presented in the Options Paper and 

compared to the current RREF base population without the weighting for rurality. This baseline 

is labelled Base RREF. Differences between the initial outcomes and revised outcomes were 

minor and only the revised outcomes are reported here. 

The factors affecting outcomes were identified as: 

1. the more accurate definition of those living in the community by 

exclusion of residents in aged residential care and disability 

accommodation, and exclusion of the veteran population eligible for the 

DVA Home Care Program in all options, compared to Base RREF 

which excludes only those 85 and over in aged residential care; 

2. the adjustments made for the frail aged in each option compared to 

Base RREF, which includes all those aged 85 and over living in the 

community with or without any level of handicap. 

Two provisos have to be kept in mind in considering both the results reported in Tables 5.1 and 

5.2: 

1. the comparisons did not include any weighting for need factors. 

2. the total base population given in the tables are for “persons”, but the 

figures do not correspond to individuals in the HACC target population 

but reflect the different components taken into account in defining each 

option and the adjustment for the frail aged. 

5.2 OPTIONS FOR CONSIDERATION FOR BASE POPULATIONS AND 

PROJECTIONS 

The results of the initial modelling for three options for the RREF base population were 

presented in the Options Paper and views on these outcomes were sought in the Round 2 

Consultations. The options for discussion were presented as follows: 

How different are 

the base 


options? 

• Comparisons are made with the current RREF without the 

weighting for rurality, labelled Base RREF 

• Differences between the options reflect 

- the adjustment made for the frail aged in each option 

- the age structure of each region. 

How do the RREF 

base population’s 

change by 2006? 

• Outcomes of projections for regions reflect underlying 

demographic trends, particularly the absolute and relative 

growth of the population aged 70 and over and the old-old. 

• Underlying demographic trends will have a significant effect 

throughout all further options. 



5.3 FURTHER ISSUES AND VIEWS ON OUTCOMES 

The only issue arising from the results of the base populations presented in the Options Paper 

was some discussion about the relevance of the size of the different base populations. As 

already noted, while some preference was expressed for Base 2 as it produced a larger 

population, the absolute size of the population does not have a bearing on the total level of 

resources made available to HACC or regional shares of those resources. 

5.4 MODELING REVISED OPTIONS FOR BASE POPULATIONS 

• In line with the balance of preferences for Base 2 and Base 3 with regard to the 

adjustment for the frail aged, both options for the revised RREF in 2002 are presented 

in Table 5.1 and projections to 2006 in Table 5.2. 

• The Base 2 and Base 3 Options include the other adjustments in the base populations as 

detailed in Step 1. 

• Two provisos should be noted for the current RREF base population: 

1. The figures are not weighted for rurality. 

2. The veteran population eligible for the VHC has not been deducted for either 2002 

or for 2006. However, such an adjustment would be highly likely in the event of 

continuation of the current RREF. 

5.5 REVISED OUTCOMES FOR BASE POPULATIONS 

Comparison of the revised outcomes for the base populations shows: 

Base 1 which includes only those with moderate, severe and profound levels of handicap at all 

ages, with no adjustment for the frail aged, generated a smaller total base population, 20.3% less 

than Base RREF. Base 1 was included to this point to illustrate the impact of adjustments for the 

frail aged component of the HACC target population in Base 2 and 3. As there was strong 

support for adjusting for the frail aged population to a greater extent than in the current RREF, 

no further results are presented for modelling on Base 1. 

Base 2 generates a much larger total base population, 47.3% larger than Base RREF, because it 

includes the population with moderate, severe or profound handicap to age 70, plus the total 

population aged 70 and over. 

Base 3 generates an intermediate total base population, 18.1% larger than Base RREF, because 

it includes the population with moderate, severe or profound handicap to age 70, plus double the 

handicapped population aged 70 and over. The smaller overall difference shows that doubling 

the handicapped aged in the community makes a more substantial adjustment for the frail aged 

component of the base population than the subtraction only of residents aged 85 and over in 

Base RREF then inclusion of the balance of all those aged 85 and over. Base 3 represent the 

starting point closest to the current RREF (without the rural weighting). 


Several features of the base population options warrant note: 


• The differences between the regional shares are very minor, for both years. This 

outcome means that weighting the base populations for need will potentially have a 

greater difference in regional shares of resource than differences in the definition of the 

base populations. 

• Rates of growth to 2006 are given in Table 5.2. The higher rate of increase for Base 3, 

8.2% overall, reflects the more rapid growth of the old-old population, among which 

prevalence of handicap is higher, whereas the lower growth for Base 2, 6.3% overall, 

reflects the lower rate of increase in the young-old population. Again, there are some 

rural and some metropolitan regions with above and below average growth rates. 

• The higher rate of growth of Base Population 3 means it is likely to bring greater 

changes in resource allocation over time than Base Population 2 which changes more 

slowly. 

Table 5.1: Comparison of Options for revised RREF Base Population, 2002 

Base Population Base RREF Base 1 Base 2 Base 3 

A: Number 424,100 337,946 624,771 500,838 

Compared to Base RREF -20.3% +47.3% +18.1% 

B. Regional Shares % share % share % share % share 

Barwon South Western 7.5 7.2 7.8 7.6 

Grampians 4.5 4.2 4.6 4.5 

Loddon Mallee 6.4 6.0 6.4 6.3 

Hume 5.3 5.2 5.3 5.3 

Gippsland 5.4 5.5 5.8 5.6 

Western 11.5 12.4 11.3 11.5 

Northern 15.1 15.6 14.8 14.9 

Eastern 20.2 20.5 20.0 20.3 

Southern 24.0 23.5 24.0 24.0 

Total % 100.0 100.0 100.0 100.0 

Table 5.2: Growth of Base Populations, 2002 to 2006 

Region Regional share in 2006 % growth 2002 to 2006 

Base Base 2 Base 3 Base Base 2 Base 3 



No. 450,185 664,545 539,677 

Barwon South 

7.4 7.7 7.6 5.1 5.1 7.0 

West 

Grampians 4.5 4.5 4.5 4.7 5.8 6.7 

Loddon Mallee 6.4 6.4 6.3 5.8 6.4 7.7 

Hume 5.4 5.4 5.3 6.6 7.5 8.4 

Gippsland 5.5 5.9 5.8 7.5 8.2 9.9 

Western 11.7 11.5 11.7 8.3 8.6 9.8 

Northern 15.1 14.9 14.9 6.2 6.8 7.9 

Eastern 19.9 19.7 20.0 4.8 5.1 6.1 

Southern 24.1 23.9 24.0 6.5 5.9 7.8 

Total 100.0 100.0 100.0 6.2 6.4 7.8 



Step 6: Outcomes of weighting for need variables 

6.1 METHOD AND OUTCOMES REPORTED 

Two sets of results were reported in the Options Paper for the initial options of weighting for six 

need variables, and the same results are reported here for the revised options for the five 

variables selected for weighting for need, namely average need weightings for regions in Table 

6.1 and comparisons with weightings for the current RREF in Table 6.2. In addition, the scaled 

need scores for LGAs and percentage weightings are reported in Appendix 3. 

Weighting for the five need variables involved three steps: 

1. Scoring each variable for each LGA on a scale from 0 to 9, with high scores 

representing high need for HACC services. 

2. Adding the scaled scores from 0 to 9 for each LGA to obtain a total score for 

each LGA out of a possible maximum of 45 (5 x 9); 

3. Converting these scores out of 45 to percentages. 

6.2 OPTIONS FOR CONSIDERATION FOR WEIGHTING OF NEED 

VARIABLES 

The outcomes of taking the initial six need variables into account were reported at regional level 

in the Options Paper and LGA level data were also presented at the Round 2 consultations. The 

consultations sought views on the outcomes as follow: 

The RREF allocates 

resources on the basis of 

relative need, and weighting 

for the six need factors 

shows variations in relative 

need 

• Do the regional weightings accord with your 

understanding of variations in need? 

Options for even and 

different weighting of the 

need variables are to be 

modelled to illustrate the 

effects of these approaches 

to weighting 

• It is important to understand that even 

weighting does not mean that all need 

variables make the same contribution to the 

model, but that this depends on the actual 

distribution of scaled scores at LGA level. 

• Have the options for weighting of need 

variable been adequately explained? 




• There was wide agreement in the Round 2 Consultations that the patterns of need shown by 

the need weightings at regional level and for LGAs reflected experience in the field. Three 

aspects of the results were noted in particular: 

1. The relatively limited gradation in the average need weightings across the nine 

regions; 

2. The more marked variations between LGAs within regions; and 

3. The insights into variations in need within regions provided by the LGA data 

compiled for the RREF and the value of having this data available for use in 

regional and local planning. 

6.4 REVISED REGIONAL OUTCOMES OF WEIGHTING FOR NEED VARIABLES 

Average weightings across all LGAs in each region are ranked as set out in Table 6.1. While 

there was a 29% difference between the lowest and highest average percentage weightings, from 

18% to 47%, seven of the nine regions were within a range of 13%. All rural regions receive a 

weighting of at least 30%. 

Table 6.1: Average Weightings for Regions 

Rank 


Weighting 

Average for all Lowest Highest Range 

LGAs 

LGA LGA 

Lowest Eastern Metropolitan 18 11 27 16 

Southern Metropolitan 26 9 51 42 

Northern Metropolitan 35 ) 9 56 47 

Western Metropolitan 36 ) 18 58 40 

Barwon South Western 39 ) 7 regions 29 44 15 

Hume 39 ) within 12% 29 47 18 

Grampians 43 ) range 29 58 29 

Gippsland 44 ) 34 67 33 

Highest Loddon-Mallee 47 ) 24 71 47 

The highest and lowest LGA weightings within each region show that there is as much variation 

between LGAs within each region as between regions. The highest score for any individual 

LGA was 32/45, giving a weighting of 71%, and the lowest was 4/45, giving a weighting of 9%. 

Comparisons that highlight this intra-regional variations are: 

• The Eastern Metropolitan region is characterised by less variation within the region; 

further, the highest need weighting for any LGA in this region, 24%, is comparable 

to the lowest need weighting in the five rural regions. 

• Barwon South Western and Hume have similar lowest and highest LGA need 

weightings and there is less variation between LGAs within these regions, less than 

20%. 



• The Northern and Southern Metropolitan Regions and Loddon Mallee are 

characterised by extreme variation, more than 40%, between LGAs within each 

region; 

• Gippsland stands out as having similarly high levels of need across all LGAs, 

starting from a highest base, 31%, with a range of 33%. 

In applying the need weightings to determine regional allocations of growth funds, it needs to be 

emphasised that: 

• The share of growth funds received will depend on the size of the total population 

of each LGA as well as the weighting. 

• The average of the weightings across the LGAs in each region is given for 

comparison purposes only and does not translate into the weighted population for 

the region, nor can growth funds for regions be estimated simply by applying the 

average weighting to the base resources currently received. The weighted regional 

populations for the RREF are built by adding the weighted base population for each 

LGA, these regional totals are then calculated as a share of the total RREF weighted 

base population for the state, and growth funds are allocated in proportion to those 

shares. 

6.5 COMPARISON WITH CURRENT RREF 

The distribution of weightings in the revised RREF set out in Table 6.2 show that it provides a 

much more fine-grained recognition of need than the current RREF. 

Table 6.2: Comparison of need weightings for rural and metropolitan regions 

Weighting Metropolitan LGAs Rural LGAs Total 

Revised Revised Revised 

Under 10% 2 2 

10-19% 7 7 

20-29% 10 5 15 

30-39% 6 15 21 

40-49% 3 19 22 

50-59% 3 5 8 

Over 60% 3 3 

Total 31 47 78 

Under the current RREF: Metropolitan LGAs and regions received no weighting for any need 

factors and only a few fringe areas rural areas received a weighting only for rurality, with most 

rural LGAs receiving the maximum weighting of close to 30%. The result was that the State 

was effectively divided into two – metropolitan areas with no weightings, and rural areas with a 

high and fairly uniform weighting. That outcome gave only a very crude recognition to 

variations in need between rural and metropolitan areas and failed to recognise variations within 

either. While the 30% rural weighting was arbitrary, it provides a convenient benchmark for 

reporting outcomes of the revised RREF, as set out in Table 6.2. 



Under the revised RREF: 24 LGAs have weightings of less than 30%; of these, 19 are in 

metropolitan regions and only 5 are in rural regions, reflecting the location of large provincial 

centres. 

54 LGAs have weightings of 30% of more; of these, only 12 are in metropolitan regions and 42 

are in rural regions. 

6.6 DETAILED LGA SCALED SCORES AND NEED WEIGHTINGS 

• The LGA scaled scores on the five need variables, total scores and percentage weightings 

used to compile Tables 6.1 and 6.2 are set out in full in Appendix 3. 

• These results are useful in demonstrating the way in which different need variables 

contributed to overall need in each LGA and highlight the need factors that contribute to 

variations in need between LGAs within any one region as well as between regions. 

Step 7: Outcomes for Regional Allocation of Growth Funds 

7.1 DEVELOPMENT OF INITIAL AND REVISED RREF OPTIONS 

Methods 

The modelling procedures used to develop the options presented in the Options Paper and for 

the subsequent revisions are the same, and involved three steps beyond the development of the 

base populations and projections already reported: 

1. Calculating the base populations in each LGA, weighted for need, 

2. Adding LGA results to give regional totals and the state total, 

3. Allocating the available growth funds in proportion to the weighted base population in 

each region. 

The Options Paper provided illustrative examples of models with all six of the initial variables 

or only four, and with and without adjustment to the weighting of selected need variables. 

Preferred options for the number of variables and adjustment to need weightings were 

canvassed in the Round 2 Consultations, and revised models then prepared incorporating these 

preferences. 

<strong>Report</strong>ing of outcomes 

Outcomes of the models are reported in terms of the share of growth funds allocated to regions. 

Outcomes as regional shares of growth funds were adopted because of the uncertainties in 

predicting actual dollar allocations, which are dependent on both the level of growth funds made 

available in both Commonwealth and State budget processes. 

The percentage shares predicted under different RREF models provide only a guide to the actual 

amounts of HACC funds that regions will receive in any year as there will be on-going change 

due to the available growth funds, continuing change in populations and projections, and the 

scores on need variables included in the models. Further, additional funding may be available 

for special initiatives; the priority areas and amounts of these funds will vary from year to year. 



By way of illustration, the distribution of HACC funds in 2000-01 above the previous year’s 

base funding is shown in Table 7.1. 

Table 7.1: HACC growth funds and other funding above base funds, 2000-01 

Region $’000 % share 

Barwon South Western 1,081 8.5 

Grampians 684 5.4 

Loddon-Mallee 985 7.8 

Hume 808 6.4 

Gippsland 805 6.4 

Western 1,319 10.4 

Northern 1,762 13.9 

Eastern 2,410 19.0 

Southern 2,805 22.2 

Regional Total 12,659 100.00 

The regional shares do not correspond exactly to the shares of growth funds allocated via the 

RREF as the funds include the adjustment factor for bringing per capita allocations to equity 

under the current RREF and also a special State only funding for Adult Day Activity Services 

(ADAS) which was allocated on the basis of the population aged 70 years and over who were 

living in the community and received the Age Pension. At the same time, cross-regional 

allocations, statewide and central office funded projects are excluded. 

In addition to possible future adjustments to any RREF formula, regional funding levels will 

also be affected by a number of factors external to the RREF that relate to the cost of service 

delivery and which need to be considered in the distribution of funds. The RREF is used only to 

determine how available growth funds should be shared between regions, and other mechanisms 

are used to establish unit pricing and performance targets for different HACC services. The 

view clearly expressed in the first round of consultations was that other measures besides the 

RREF were required to deal with these cost drivers and other particular aspects of service 

delivery. These factors were raised in the Consultation Paper and discussed further in the last 

section of the Options Paper and in the Round 2 Consultations, and are taken up again in 

Section 8 of this <strong>Final</strong> <strong>Report</strong>. 



7.2 COMPARISON OF CONTINUATION OF CURRENT RREF AND INITIAL 

OPTIONS 

Range of initial options 

A total of 12 initial options were modelled to illustrate how different approaches to adjusting the 

weighting of need factors and inclusion of 4 or 6 variables affected the regional allocation of 

growth funds. These options were modelled for the initial Base Populations 2 and 3, as follow: 

Option Initial Base 


Weighting of need 

variables 

Number of need 

variables 

Current RREF Rurality only 

(1) Base 2 Even 4 


(3) Base 2 SES x 2 4 

(4) Base 2 SES x 2 6 

(5) Base 2 ARIA x 2 4 

(6) Base 2 ARIA x 2 6 



(9) Base 3 SES x 2 4 

(10) Base 3 SES x 2 6 

(11) Base 3 ARIA x 2 4 

(12) Base 3 ARIA x 2 6 

One of the rationales in modelling options with only four variable models was that while 

recognising that a great many variables contribute to differences in the need for HACC services 

between LGAs and regions, the RREF formula has to focus on a small number of key variables. 

The variables excluded from the four variable models were: 

1. life expectancy, on grounds of high correlation and hence duplication with median 

household income; and 

2. residential care shortfall, on grounds of the difficulty of allocating excess beds in 

some LGAs to adjacent LGAs with shortfalls, and in projecting changes in 

residential care provision. 

Other models could have been developed with any of the other variables excluded. However, as 

the remaining variables contributed less to the overall model, as detailed in Step 4 above, there 

would be less change in outcomes. 

The current RREF and all the other options are constrained by the total amount of growth funds 

being fixed, so that redistribution of funds among regions has to balance out. The result is that 

all regions continue to receive growth funds, however the 12 options show different regional 

shares than would be expected under the continuation of the current RREF. 

Outcomes of initial options 

Whilst, the regional shares of growth funds projected for 2002 under the current RREF provide 

a basis for comparison of outcomes of other models, it should be remembered that the outcome 

under the current RREF is not fixed and that there would be further changes in the allocation of 

resources between regions if the current RREF were to continue. Continuing reallocation of 

growth funds would come about due to changes in regional populations over time, and 

continuing adjustments to achieve per capita equity as defined by the current RREF. Further, 

there would be likely to be an adjustment for the VHC in any continuation of the current RREF. 



The outcomes of the 12 initial options were discussed in detail in the Options Paper and are 

summarised here in Table 7.2. This summary table was presented and discussed at the Round 2 

Consultations to illustrate the diversity of outcomes generated by different models. To highlight 

this diversity: 

• the maximum share for each region under any option is shown in bold. 

• the minimum share for each region under any option is shown in italics and underlined. 

Table 7.2: Comparison of outcomes for current RREF and 12 initial options 

Base Population Current Base Population 2 Base Population 3 

Weighting 


Even SES X 2 ARIA X 2 Even SES X 2 ARIA X 2 

No. of variables 

4 6 4 6 4 6 4 6 4 6 4 6 

Column number (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) 

Refer to Table 10 11 10 12 12 13 13 11 10 12 12 13 13 

Barwon S-West 7.73 7.95 8.00 8.18 8.15 8.06 8.07 7.35 7.40 7.57 7.54 7.46 7.47 

Grampians 5.17 4.68 4.63 4.83 4.74 4.83 4.74 4.36 4.32 4.50 4.43 4.49 4.42 

Loddon Mallee 7.59 6.96 6.78 7.07 6.89 7.20 6.97 6.37 6.21 6.48 6.32 6.60 6.39 

Hume 6.26 5.67 5.55 5.78 5.64 5.84 5.68 5.43 5.31 5.54 5.40 5.59 5.44 

Gippsland 6.37 6.38 6.48 6.49 6.54 6.63 6.64 6.21 6.31 6.32 6.37 6.45 6.46 

Western Metro 10.77 11.62 11.72 11.51 11.62 11.33 11.50 12.85 12.93 12.74 12.84 12.55 12.71 

Northern Metro 14.16 15.45 15.35 15.24 15.22 15.09 15.12 16.25 16.13 16.04 16.00 15.91 15.91 

Eastern Metro 19.35 18.28 17.99 17.84 17.73 18.28 18.03 18.53 18.23 18.11 17.99 18.56 18.29 

Southern Metro 22.60 23.01 23.49 23.07 23.46 22.75 23.25 22.64 23.15 22.71 23.11 22.39 22.91 

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Comparison of the 12 options with the current RREF (with eligible Veterans included in the 

base population) and with each other points to the following conclusions: 

• The differences between the regional shares of growth funds are small overall. Compared 

to the current RREF, differences overall are less for Base Population 2 than for Base 

Population 3. 

• There is a change in the shares of growth funds for rural and metropolitan regions for all the 

options compared to the current RREF. In the current RREF, only the five rural regions 

received a need weighting for rurality, whereas in all of the options for a revised RREF, all 

metropolitan regions also received a weighting based on the need variables. When all 

LGAs and hence all regions are weighted on the same need variables, it is evident that no 

one model consistently generates maximum or minimum shares for any set of regions. No 

one model results in consistent differences between metropolitan regions vis-a-vis nonmetropolitan 

regions indicating that patterns of need are more complex than a simple ruralurban 

divide. 

• Differences in population size mean that even where rural LGAs receive the same or higher 

need weighting than metropolitan areas, regional shares of growth funds will continue to be 

smaller than the metropolitan regions due to smaller underlying populations and trends in 

these populations over time. The net effect is that as metropolitan regions receive increased 

shares of funds, rural regions receive smaller shares, but the extent and direction of change 

varies between the options. 



• Compared to the model with six variables with no adjustment in the weighting of the need 

variables, the effect of using only four variables or of adjusting the weighting of selected 

variables was to reduce the overall variability across all regions rather than bringing about 

significant changes in regional shares of growth funds. This outcome is largely because 

reducing the number of variables or increasing the weighting of selected variables has the 

effect of suppressing the contribution of the other variables. While the impact of the 

variables that are retained or given increased weighting becomes more dominant, the 

capacity of the model to capture variations in need due to other variables is limited. 

• Further models could be developed including or excluding other need variables and 

applying different weightings. While further models are likely to show other variations in 

regional shares in growth funds, and possibly in different directions, the effects are likely to 

be even smaller as other variables did not make as large contributions to the overall model 

as those selected in the examples presented here. 

• A selection of the initial models was developed to show outcomes in 2006 and reported in 

the Options Paper. The outcomes show that the RREF has an in-built dynamic through 

annual adjustment in line with population projections and changes in the components of the 

base populations, and changes in the resource allocations are driven accordingly. The 

results of the projections for the initial model are not reported here but projected outcomes 

for the revised modelling are detailed in Table 7.3. 

7.3 OPTIONS FOR CONSIDERATION FOR RESOURCE ALLOCATIONS 

The options presented in Step 7 in the Options Paper illustrated the impact of modelling a range 

of variables and different weightings, as summarised below. Views on these outcomes were 

sought in the Round 2 Consultations. 

Options for different 

base populations, 

with even weighting 

of variables 

The effects of underlying demographic trends are evident 

in continuation of the current RREF and carry through all 

options. 

The effects of RREF options on the distribution of growth 

funds between regions will also affect performance targets. 

Options for 4 or 6 

variable model 

Options for 

unadjusted or 

adjusted weighting of 

variables 

Is a 4 variable model preferred? 

Or is a 6 variable model preferred as being more 

comprehensive? 

Should models be prepared with different weightings for 

other variables – if so, 

which variables, and 

how much should they be weighted? 




• The outcomes of the 12 models developed in the Options Paper were summarised as 

presenting the following choices: 

Options that result in smaller differences overall generate smaller shifts between 

regions. 

Options that result in larger differences overall concentrate larger shifts on a smaller 

number of regions balanced by consequent shifts from more regions. 

• The comparison of the 12 options highlighted that no one option consistently resulted in 

maximum or minimum outcomes for all rural or all metropolitan regions. The current 

RREF resulted in a maximum share for three of the five rural regions and one metropolitan 

region, and minimum shares for two metropolitan regions. 

• The differences between the 4 and 6 variable models, and between models in which the 

socio-economic variable or the ARIA were doubled were minor. In particular, it should be 

noted that in the four models in which the ARIA was doubled, a maximum share resulted 

for only one rural region. 

• Four consistent views emerged from the assessment of the 12 options compared to the 

current RREF in the Round 2 Consultations: 

1. Options to revise the RREF pointed to the regions which were relatively under 

or over-funded in the current RREF. Participants from the Northern and 

Western Metropolitan Regions especially felt that projected outcomes from 

options for revision justified their claims of under-funding under the current 


2. While participants obviously preferred the model that gave the maximum share 

of resources to their region, there was wide acknowledgement of the need for 

the RREF to improve equity between regions and to be seen to be equitable. 

Some participants in rural regions, but not all, supported continuation of the 

current RREF because it maximised their region’s share of resources, but the 

current RREF was at the same time seen to be less equitable as a formula. 

Complementing any revised RREF with other measures that addressed the cost 

of travel in rural areas was widely seen as the preferred solution. 

3. Given the small differences between the 12 models and the current RREF, and 

that underlying demographic trends would lead to changes in future regional 

shares of resources, participants recognised that the model which gave an 

optimum outcome for their region in 2002 might not produce the optimum 

outcome in subsequent years. 

4. An overall preference was for a model with fewer rather than more variables, 

and while there was support for adjusting the weighting of some individual 

variables, this view was qualified in the absence of any clear rationales for 

adjusting one variable rather than another, or for the extent of adjustment that 

might be warranted. The differing contributions that the variables actually 

made to the model was also recognised as moderating the need for further 

adjustment. 



7.5 REVISED OUTCOMES FOR REGIONAL RESOURCE ALLOCATION 

The revised outcomes for regional resource allocations presented in Table 7.3 incorporate the 

resolution of options reported for Steps 1 to 4, in favour of: 

1. Continued modelling of Base 2 and Base 3 populations; 

2. Inclusion of five need variables, and 

3. Weighting without adjustment, in accord with the distribution of scaled scores, and 

double weighting of the SES and ARIA variables to illustrate the impact of differential 

weighting of variables. Maximum and minimum shares for each region are highlighted. 

Table 7.3: Revised outcomes for resource allocation, 2002 and 2006 

Regional % share of growth funds under model 

Year 2002 Base Unadjusted SES variable x 2 ARIA x 2 

RREF Weighting 


Base 2 Base 3 Base 2 Base 3 Base 2 Base 3 

Barwon SW 7.73 8.10 7.92 8.26 8.08 8.17 7.99 

Grampians 5.17 4.78 4.73 4.88 4.82 4.88 4.82 

Loddon Mallee 7.59 7.02 6.91 7.12 7.01 7.21 7.09 

Hume 6.26 5.64 5.59 5.73 5.69 5.78 5.73 

Gippsland 6.37 6.32 6.16 6.43 6.27 6.52 6.36 

Western 10.77 11.79 12.00 11.66 11.87 11.53 11.74 

Northern 14.16 15.51 15.58 15.32 15.39 15.22 15.29 

Eastern 19.35 17.75 18.07 17.49 17.80 17.83 18.15 

Southern 22.60 23.08 23.05 23.11 23.08 22.86 22.83 

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Year 2006 

Barwon SW 7.67 8.00 7.86 8.16 8.02 8.06 7.93 

Grampians 4.95 4.75 4.68 4.84 4.77 4.85 4.77 

Loddon Mallee 7.58 7.02 6.90 7.12 7.00 7.21 7.09 

Hume 6.30 5.70 5.62 5.79 5.72 5.84 5.76 

Gippsland 6.47 6.43 6.29 6.54 6.40 6.64 6.49 

Western 11.04 12.00 12.20 11.87 12.07 11.75 11.94 

Northern 14.11 15.57 15.60 15.38 15.41 15.28 15.32 

Eastern 19.15 17.54 17.79 17.29 17.53 17.62 17.88 

Southern 22.73 22.98 23.05 23.01 23.08 22.76 22.83 

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Note: Current RREF includes eligible Veterans in the base population. 


Four features of the revised outcomes overall warrant comment: 


1. The differences in regional shares of growth funds between all models are small. 

For Base 2 and Base 3, the shift between regions is in the order of only 3.25% of 

growth funds. Assuming growth at 6% per annum, estimated growth funds for 

2002 would be some $15.7 million, and the amount reallocated would be in the 

order of only $500,000. 

2. It is apparent that no one model shows a consistent pattern of maximum or 

minimum shares of growth funds to a particular set of regions but rather that 

marginal shifts occur between both rural and metropolitan regions under different 

options. 

3. The most marked reallocations occur under Base 3, without adjustment of need 

weighting, which generates maximum shares for two large metropolitan regions, 

and larger shares than under the current RREF for two other regions; at the same 

time, about half the reallocation comes from the fourth metropolitan region, with 

the balance spread across the other four rural regions. 

4. The impact of the changes in the share of resources allocated to rural regions under 

any revised RREF was widely remarked in the Round 2 consultations. Recognising 

that performance targets were tied to the level of resources allocated through the 

RREF, and that this outcome would not address the additional costs incurred in 

service delivery in rural regions, complementary measures were seen to be required. 

The kinds of measures suggested are noted in Section 8. 

Three aspects of the differences between the models warrant comment: 

1. The current RREF does not result in maximum shares for all rural 

regions. 

2. Comparison of Base 2 and Base 3 with unadjusted weightings shows 

Base 2 results in a flat outcome, with no maximum or minimum shares 

for any region, and a lower reallocation overall than Base 3. 

3. The effect of doubling the weighting of the SES and ARIA variables is 

to reduce the variation in the outcomes of these models rather than to 

generate more marked changes in regional shares. 

7.6 ASSESSMENT OF OPTIONS 

The outcomes of different options in terms of the extent of overall change in allocations of 

growth funds and in shares allocated to regions are of most immediate interest. The overall 

differences are however small, and these outcomes will change from year to year given the 

dynamic nature of the variables included in the RREF and underlying population trends. 

Assessment on the basis of a single year outcome, or even a five year projection, is thus a 

limited view of the effectiveness of the RREF in achieving equity in HACC or the extent to 

which the options developed in the Review are improvements over the current RREF. 

A second level of assessment can be made in terms of the relative contribution of the three 

elements of the RREF model - the base population, the adjustment for the frail aged, and the 

weighting for need - to the overall outcomes compared to the current RREF. This comparison 

for the current RREF and the Base 2 and Base 3 options is presented in Table 7.4. 



The contributions that the three components make to the current RREF are as reported in Part A. 

Three steps were required to estimate the contributions that the three components make to the 

Base 2 and Base 3 options: 

1. The base populations reported in Table 5.1 were divided into a “core” 

base population of those with core activity restrictions of all ages (that 

is, Base 1 in Table 5.1), with the balance comprising the additional 

adjustment made for the frail aged. 

2. The total base populations were then weighted by the average need 

weighting score for all LGAs, 36.6%, to produce a total for the 

weighted RREF base populations. It is the regional shares of this 

weighted RREF population that are the basis of allocations under the 


3. The contribution of each of the three components was then calculated 

as a percentage of the total RREF weighted population. Because the 

same average weighting has been applied to both base populations, the 

need weighting makes the same contribution to Base 2 and Base 3. 

Note that the contribution of the 36.6% weighting to the total weighted 

population becomes 26.8%. It should also be noted here that the 

average need weighting is without adjustment to the weighting for any 

of the variables, and that any such adjustments would only change the 

balance of the variables within the total weighting and not change the 

contribution of the total need weighting to the overall model. 

Table 7.4: Share of RREF outcomes attributable to base population components 

and need weightings 

“Core” base Adjustment Weighting for Total 


(those with core 

activity 

restriction, 

all ages) 

for 

frail aged 

need variables 

Current RREF 87.7 5.5 6.8 100 

Revised RREF -Base 2 39.6 33.6 26.8 100 

Revised RREF - Base 3 49.4 23.8 26.8 100 

In a revised RREF using either Base 2 or Base 3, both the frail aged and the need weighting 

make a much greater contribution than in the current RREF. The contribution of the need 

weighting increases from 6.8% in the current RREF to 26.8% both the revised RREF models. 

The weighting in the revised RREF models encompasses five broad dimensions of need 

compared to weighting only for rurality in the current RREF. This multi-dimensional need 

weighting addresses the criticism of the restricted nature of the need weighting in the current 




The adjustment for the frail aged increases from 5.5% to 33.6% of the revised RREF using Base 

2 and 23.8% using Base 3; it needs to be remembered this adjustment is in addition to the frail 

aged population included in the “core” of the base population. The contribution of the “core” 

base population is reduced from 87.7% in the current RREF to just on 40% and 50% in the 

revised RREF using Base and Base 3 respectively. The relative merits of the adjustments for 

the frail aged in Base 2 and Base 3 have been discussed in detail in Part B, Step 1, but when 

these additional adjustments are taken together with the frail aged in the “core” base population, 

both make for an overall outcome that gives a much closer match to the importance of the frail 

aged in the HACC client population and so address this shortcoming in the current RREF. 

The increased contributions of the adjustments for the frail aged population and weighting for 

need variables in the revised RREF models indicate that the two major shortcomings identified 

in the current RREF have been addressed in the revised RREF. The revised RREF models 

thus provide the basis for more equitable outcomes in resource allocation than continuation of 

the current RREF. 


PART D: ACHIEVING EQUITY IN THE HACC 

PROGRAM 

The RREF makes a major contribution to achieving equity in HACC as the mechanism through 

which growth funds are allocated to regions, but a number of other factors also affect equity of 

outcomes in service delivery. The Terms of Reference of the Review pointed to these factors, 

and they were raised in the consultations and in research conducted in the course of the Review. 

This part of the <strong>Final</strong> <strong>Report</strong> summarises four issues and identifies options through which they 

could be addressed in conjunction with the implementation of any revised RREF. 

Regional and local planning for HACC 

While the RREF is constructed with data at the LGA level, it is applied by DHS only at regional 

level for state-wide resource allocation. Some DHS Regional Offices however apply the RREF 

at a sub-regional or local level to develop notional resource allocations but the RREF is not 

formally applied in this way. 

The variability in regional and local planning processes was a subject of major discussion in the 

consultations, and a clearer relationship between the allocation of resources to regions through 

the RREF and the processes by which resources were subsequently allocated within regions was 

seen to be desirable. It is not intended that any revised RREF be applied at the local level, but 

access to the basic statistical data compiled in the Review was widely sought and a standard 

data base that was regularly updated would make a major contribution to more systematic 

planning in all regions. This data then needs to be considered in conjunction with a range of 

quantitative and qualitative information on local service provision, including reports using the 

HACC Minimum Data Set. As HACC services operate as part of local service systems, local 

knowledge is also required and Primary Care Partnerships now provide forums for the exchange 

of such information. By way of example, uneven access to region-wide services is a problem 

that has to be addressed at the regional and sub-regional level, with resolution depending on the 

particular configurations of local services and networks between providers. 

The Memorandum of Understanding between the Municipal Association of Victoria and DHS 

on local community services planning is another vehicle for advancing integrated regional and 

local planning. The level of participation of Local Government in the Review Consultations 

indicates the commitment to this goal on the part of Local Government as a major HACC 

provider 

While planning in conjunction with annual HACC funding rounds is focused on growth funds, it 

needs to be emphasised that the amount of these new funds is small compared to pre-existing 

levels of funding, and reviews of existing service arrangements are at least as important in 

regional and local planning as the development of new services at the margin. 

Four further issues relating to HACC planning processes that were canvassed in the Review and 

that need to be taken into account in implementing any revised RREF are: 

1. Having a statewide notional service mix for HACC was seen to be 

useful in providing a benchmark to which regional variations could be 

compared. Any notional service mix was not seen as a prescription, but 

would rather provide a basis for assessing the reasons for variations that 

did arise. Some specification of benchmarks for service provision 

would also contribute to assessing the adequacy of service provision. 


Part D: Achieving Equity in the HACC Program 

2. The linking of HACC planning and resource allocation through the 

RREF to planning and resource allocation of related programs at subregional 

and local level was identified as a high priority. The analysis 

of resource allocation formulas used in the Disability Services Program 

and in the Post Acute Care Program identified a number of common 

elements with the RREF, at the same time as acknowledging that 

different elements were needs where target groups were different. 

Programs without formal formulas were of more concern, as there was 

a risk that resource allocation in these programs could distort needs 

based allocation through the RREF. Consideration of the applicability 

of the RREF or a similar formula to these program areas would go 

some way to achieving more consistency. 

3. The methods used by other State Governments to distribute HACC 

funds within each state were found to be less well developed then the 

current RREF, and rather than pointing to ways ahead for Victoria, the 

Review was likely to provide a lead to other States. DHS has the 

opportunity to take up several developments from the Review with the 

Commonwealth in debate around the national equalisation strategy for 

HACC funding. Two areas of particular relevance to the national scene 

are the options developed for operationalising the definition of the 

HACC target population and the need for continuing liaison with the 

ABS in planning of the next DACS. 

4. Consultations on targeting in HACC were held in conjunction with the 

first round of consultations in the Review. Targeting is concerned with 

the allocation of resources between clients on the basis of relative need 

and so complements the operation of the RREF at regional level. 

There was support for further development of the concept of a special 

mechanism for funding clients needing exceptionally high levels of 

support and funding, along the lines of the High Care Pool that has 

been operated by the NSW Home Care Services since late 1998. A 

report of the High Care Pool presented in early 2001 showed that it had 

met the objectives set in relation to service mix targets, client 

satisfaction, enabling HACC to maintain service levels of lower needs 

clients and providing portability of service if clients relocated within 

the state (Hetherington, 2001). These positive outcomes indicate that 

the High Care Pool made an effective contribution to achieving equity 

in HACC, and further the need to consider the option in Victoria. 

Funding measures complementary to the RREF 

Throughout the consultations and the subsequent modelling of options, it became clear that 

while the current RREF and any revised RREF operates effectively as a tool for statewide 

allocation on the basis of a consistent definition of need, it cannot address other factors that 

have an impact on the cost of service delivery and hence on resource requirements, nor can it 

address special cases that may arise in some areas but do not have statewide implications. Four 

aspects of HACC funding arrangements outside the RREF were raised. 



Additional costs of service delivery in rural areas 

While the rurality weighting in the current RREF was intended to address costs associated with 

delivery of services to clients living in rural and remote areas, it has proved to be a “catch 22”. 

Participants in the consultations pointed out that additional funding through the RREF led to 

increased performance targets at the same unit price, and so was an ineffective means of 

recognising higher costs per unit of service delivered. There was also some debate as to the 

overall balance of different cost factors in rural and metropolitan regions. Given that an 

analysis of cost differences carried out by DHS in preparation for the introduction of unit 

costing in 1998 produced ambivalent results about cost differentials between rural and 

metropolitan areas, there was seen to be a need to update that work. 

A revised RREF would take account of need factors in addition to rurality that affect the volume 

of service need, but would not address other factors that affect the cost of service delivery in 

rural areas. Factors relating to scale of service operation may be more appropriately addressed 

by service development strategies that bring providers together, for example, to share 

information technology and staff training, than through the RREF. In any measures to address 

travel costs, it was considered important to separate clients who lived in major rural centres and 

larger towns from “distant” clients so that any supplementary measures could be targeted to 

meeting the extra costs of service delivery to the latter group. 

A related issue concerned the need to ensure access to region-wide services, but which could not 

deliver at the same level to all local areas. This uneven access is partly a matter of funding 

matter but also relates to service development and planning. 

Service development grants for special needs groups 

Koori services 

Provision of services to Koori clients can mean increased costs where relatively 

small scale Koori specific agencies have catchment areas that extend across 

several LGAs, and even across regional boundaries, whether in rural or 

metropolitan areas. This scale factor is similar to the issues affecting service 

availability for remote clients, and can result in workers from small agencies 

seeing only a few clients per day. Other issues affecting delivery of services to 

Koori clients, whether by Koori specific agencies or other agencies, such as 

awareness of family roles in Koori culture and recruitment and training of 

Koori staff, could be further addressed through continuing the kinds of service 

development initiatives that have already been undertaken. 

Services for culturally diverse client groups 

Delivery of services to culturally diverse client groups was also seen to carry 

additional costs, such as provision of interpreter services, for general HACC 

agencies that serve large numbers of clients from particular non-English 

speaking backgrounds. Service development grants are again a means of 

promoting strategies that can enhance the capacity of general agencies to meet 

the needs of these clients. Such strategies include closer liaison with ethnospecific 

providers to foster provision of more culturally appropriate services 

wherever possible, recruitment of staff from relevant cultural backgrounds and 

for training of all staff. However, where numbers of particular groups are small 

and/or no workers of the same cultural background as the client are available, 

the requirement for access to interpreter services needs to be recognised. 



Unit cost structure 

The unit cost structure for HACC services was seen as providing insufficient funding for 

providers to maintain levels and standards of service provision in the face of rising costs and 

continually growing demand. Inconsistencies between HACC unit prices and pricing under 

other related programs were also noted. 

It was understood that the absolute level of funding for HACC and issues of unit pricing were 

beyond the scope of the Review but were being addressed within the overall funding strategy of 

the Aged, Community and Mental Health Division of DHS. 

Consistency in fees policy 

While the issue of capacity to raise fees has been substantially addressed by inclusion of a 

socio-economic indicator in the revised RREF, the question of consistency in fees policies 

remains. Although a standard fees policy has been applied in the administration of HACC in 

Victoria since 1998, it was considered that there was considerable variation in practices of 

individual providers and that this variation affected both equity of access for users and revenue 

raised by providers. 

Relationshiop of Growth Funds to HACC Base funds 

While the Review focused on the RREF as a mechanism for allocating HACC growth funds 

between regions, the RREF brings about changes in the shares of HACC base funds that regions 

receive through two means: 

1. Each year’s growth funds are incorporated into the recurrent base funding that agencies 

in each region receive in the next year; and 

2. By defining the level of per capita funding that represents equity across regions, the 

RREF identifies the extent to which each region’s base funding varies for equity and the 

extent of possible adjustment needed to bring all regions to within 5% of equity.. 

The need for adjustment to bring base funding into line with equity as defined by the RREF is 

recognised in the provision made in the current RREF for reserving a proportion of growth 

funds for reallocation to regions that all more than 5% below the level of equitable funding they 

should receive. In effect, growth funds are divided into a “normal growth” component and an 

“equity adjustment” component. These two components were identified in the Consultation 

Paper (p. 8): 

1. The RREF is used to measure the share of resources currently allocated to the nine DHS 

regions against an “equity” distribution in which any region would receive the same 

number of dollars per person in the Target Population. Where any region is more than 

5% below “equity” some of the annual growth funds are set aside for a special 

allocation to these under funded regions to bring them closer to the statewide level of 

equity funding (ie. the equity adjustment component as above). 

2. The remaining growth funds (ie the normal growth component as above) are then 

allocated to all regions in accord with each region’s proportion of the State’s total 

Target Population. The size of each regional HACC Target Population is built up from 

estimates of the HACC Target population in each LGA. 



Options for revising the RREF do not result in dramatic shifts in resources between regions 

because the differences are relatively minor. There are greater differences between Local 

Government Areas in regions than between regions. Participants in both rounds of 

Consultations pointed out that such gradual changes would achieve only limited progress 

towards overall regional equity and that underlying inequities in base funding would persist 

unless further action was taken. 

As adoption of any revised RREF would redraw the equity line, it was argued that the equity 

component needs to be adjusted accordingly. Once a decision is made on a revised RREF, it 

will be possible to identify the scale of the equity component required and the time frame over 

which equity in regional shares of HACC funding could be realised, taking account of available 

resources. It should be stressed that, as with past equity adjustments, funds for this purpose 

would be set aside before the amount of growth funds to be allocated through the RREF was 

determined and would not affect the absolute amount of base funding that regions continued to 

receive or the shares of growth funds allocated through the RREF. 

In considering the relationship between annual HACC growth funds and existing base funds 

received by regions, it needs to be emphasised that there is only a limited nexus between the 

share of base funds and the share of growth funds that any region receives. The share of growth 

funds is projected forward for the coming year by the RREF, independently of the pre-existing 

share of base funding that any region receives which reflects historical trends and the 

incorporation of growth funds over many years. Rather than growth funds following the 

existing shares of base funding, it is the RREF that leads the determination of equitable shares 

of growth funding and base funding. 

There was support for action to address inequities in HACC base funding as part of the 

implementation strategy for any revised RREF. Continuing to identify an annual equity 

adjustment would provide the means of bringing base funding into line with equity as defined 

by the a revised RREF. The scale of adjustment required would be indicated by the different 

between the shares of base funding and the equitable shares defined by the revised RREF, as for 

growth funds. 

Future review and on-going development of the RREF 

Options for future review and on-going development of the RREF were identified at two levels. 

First, new data for updating the data used in the RREF will become available from three sources 

in the next two years: 

1. The next national census is to be held in August 2001. As well as 

providing new data for updating of the base populations for the RREF 

with new DOI projections developed after the census, the census will 

enable updating and refinement of the four need variables that use 

census data, namely median household income, cultural diversity, the 

Koori population and the ARIA. Updating will take account of the 

combined effect of different rates of population growth between LGAs, 

associated changes in age structures, and changing characteristics of 

local populations. 

2. Implementation of the HACC Minimum Data Set will generate a 

considerable amount of relevant data at LGA level over the next 12 

months. These data will be especially useful for comparing estimates 

of the size and characteristics of local HACC target populations based 

on the DAC Survey with clients using services. 



3. The next DAC Survey is planned for 2003 and together with ongoing 

work in DHS on the burden of disease, alternative measures should 

then become available for defining the population in need of HACC 

services on the basis of disability, limitations in social participation and 

need for assistance in activities of daily living. 

Apart from these specific opportunities for updating the data which is used in constructing the 

RREF, there is a need for on-going monitoring of the outcomes of any revised RREF that is 

implemented. It will be some time before such outcomes are apparent, and while a nine year 

interval without review as has occurred for the current RREF is too long, too frequent review 

can lead to instability. Updating of the need variables in the revised RREF when data become 

available from the 2001 Census is a relatively straightforward procedure and it is proposed that 

a full review of the structure of the revised RREF be made at the time that data from the next 

DACS survey becomes available, probably around late 2003 or early 2004. Consideration of 

new DACS data in conjunction with data from the HACC Minimum Data Set could lead to 

more significant changes in construction of the RREF rather than just updating of data. 

In the meantime, DHS should continue to liaise with the ABS through the User Group for the 

DACS to ensure maximum usefulness of the survey results for administration of HACC and 

other departmental programs. There is also a need for research that combines “top down” 

estimates derived from the DACS survey with “bottom-up” local area surveys using the current 

DACS schedule, and drawing on HACC MDS data from local providers. This work would 

inform the development of community care client classifications. 


APPENDIX 1: Inputs to the Review Process 

APPENDIX 1.1: THE REVIEW REFERENCE GROUP 

Chair 

Consumer Organisations 

ACROD Ltd Victorian Division 

Action on Disability within Ethnic 

Communities 

Alzheimer’s Association of Victoria 

Ms Patricia Reeve, 

Council on the Ageing, Victoria 

Ms Sue Kirkegarde, Executive Officer 

Ms Licia Kokocinski 

Ms Phillipa Angley, Policy Officer 

Association for Children with a Disability Inc Michael Gourlay, Chief Executive Officer 

Carers Victoria Inc 

Council of Intellectual Disability Agencies 

Council on the Ageing (Vic) Inc 

Ethnic Communities Council of Victoria 

Older Persons Action Centre (OPAC) 

Victorian Aboriginal Community Controlled 

Housing Organisation 

Union and Professional Organisations 

Australian Nursing Federation (Vic. Branch) 

Australian Services Union – 

MEU/Private Sector Victoria Branch 

General Practice Division Victoria 

Health Services Union Australia No. 1 Branch 

Australian Council of Community Nurses 

Local Government 

Municipal Association of Victoria 

Local Government Professionals Group 

Ms Maria Bohan, Executive Officer 

Mr Robert Pascoe 

Mr John Wise, Treasurer 

Mr Hakan Akyol/Ms Miriam Suss, Executive 

Officer 

Ms Susan Healey, Chairperson 

Mrs Bess Yarram, Chairperson 

Ms Jill Clutterbuck, Professional Officer 

Ms Joan Price, Organiser 

Ms Lenora Lippman 

David Haynes, Industrial Officer 

Ms Marie-Louise Tucker, Convenor 

Clare Hargreaves, 

Senior Policy Advisor – Social Policy 

Ms Jan Consedine, City of Greater Shepparton 

Ms Derryn Willson, City of Moreland 

Ms Darnelle Eckersall, Banyule City Council 

Mr Paul O’Brien/Ms Anne Waters, City of 

Warrnambool 


APPENDIX 1.1 continued 

Commonwealth Government 

Department of Health and Aged Care 

Department of Veterans’ Affairs 

Provider Representative Bodies 

La Trobe Community Health Service 

Royal District Nursing Service 

Victorian Assoc. of Health & Extended 

Care 

Victorian Community Health Association 

VHA 

Ms Margaret O’Loughlin, Assistant Director, 

Planning & Community Programs 

Ms Wendy Allan 

Asst. Director, Veterans’ Home Care Team 

Val Callister, Chief Executive Officer 

Ms Fiona Hearn 

Ms Mary Barry, Chief Executive Officer/ 

Ms Sharon D’Rosario 

Ms Linda West, President 

Ms Anne Fox, Bundoora Extended Care/ 

Ms Fiona McKinnon, Western Health 

APPENDIX 1.2: DEPARTMENTAL STEERING COMMITTEE 

Aged, Community and Mental Health 

Division 

Angela Jurjevic , Director 

Coordinated and Home Care Branch 

Jeannine Jacobson 

Alexandra Hurley 

Jane Herington 

Kriss McKie 

Jeremy Maddox 

Justin McDermott 

Lisa Lane 

Carol Pyke 

Viki Perre 

Other Branches and Divisions 

Michael Ackland 

Jane Bennett 

Jacinta Bleeser 

Felicity Ison 

Holly Piontek-Walker 

Simon Moy 

Julie Walsh 

Brenda Whitmore-Seidel 

Noble Tabe 

Regional Offices 

Richard Deyell, Northern Metro 

Phil McCann, Loddon Mallee 


APPENDIX 1.3: CONSULTATION SCHEDULES 

Round 1: November-December 2000 

Date Metro/Rural DHS Region Location 

23 November Metro Northern Coburg 

27 November Rural Barwon South Western Warnambool 

28 November Rural Grampians Ararat 

30 November Metro Southern Frankston 

1 st December Metro Western Footscray 

4 December Rural Gippsland Traralgon 

5 December Rural Hume Benalla 

6 December Rural Loddon Mallee Bendigo 

7 December Metro Eastern Nunawading 

20 December Rural Loddon Mallee Mildura 

Rural Barwon-South West Geelong 

Koori Groups 

Round 2: March –April 2001 

Date Metro/Rural DHS Region Location 

26 March Rural Hume Benalla 

27 March Rural Gipplsand Traralgon 

29 March Rural Barwon-South West Warrnambool 

30 March Metro Eastern Nunawading 

3 April Metro Western Footscray 

4 April Metro Southern Frankston 

4 April Rural Loddon Mallee Mildura 

9 April Rural Loddon Mallee Bendigo 

10 April Metro Northern Coburg 

11 April Rural Grampians Ararat 

Rural Barwon-South West Geelong 

Koori Groups 


APPENDIX 1.4: SUBMISSIONS RECEIVED 

Local Government 

Statewide 1. Municipal Association of Victoria 

Metropolitan 2. Darebin City Council and Darebin Community Health Centre 

3. Kingston City Council 

4. Maribynong Council and Western Region Health Centre 

5. Moreland 

6. Nillumbik 

7. Port Phillip Council 

8. Western Region Commission (Cities of Brimbank, Hobson’s 

Bay, Maribyrnong, Melbourne, Mooney Valley, ISIS, and 

Shire of Melton) 

9. Whittlesea 

10. Wyndham City Council 

11. Yarra Ranges Shire Council 

Regional 12. Corangamite Shire Council 

13. Horsham Rural City Council 

14. Hindmarsh Shire Council 

15. Southern Grampians Shire Council 

16. Wangaratta Council 

17. Warrnambool City Council 

18. Yarriambiack Shire 

Health Services 

Consumer Organisations 

Provider Agencies 

19. Barwon Health 

20. Royal Children’s Hospital 

21. San Remo and District Community Health Centre 

22. Wimmera Health Group – Horsham 

23. Yarra Ranges Community Health Service 

24. Alzheimer’s Association 

25. Australian Polish Society 

26. Association for Children with a Disability 

27. Carers Victoria 

28. Jewish Care 

29. Uniting Care 

30. Royal District Nursing Service 

31. Victorian Healthcare Association (VHA) 

32. Victorian Aged, Health and Extended Care (VAHEC) 


Appendix 2: ABS Disability, Ageing and Carers Survey 

Definitions and Frequently Asked Questions 

1. Definitions used in the ABS Disability, Ageing and Carers Survey, 1998 

Source: Disability, Ageing and Carers: Summary of Findings. ABS Catalogue No. 4430.0 

A person has a disability 

If he/she has one of the following, that has 

lasted or is likely to last for 6 months or more 

• Loss of sight (not corrected by glasses) 

• Loss of hearing (with difficulty in 

communicating or use of aids) 

• Loss of speech 

• Chronic or recurring pain that restricts 

everyday activities 

• Breathing difficulties that restrict everyday 

activities 

• Blackouts, fits or loss of consciousness 

• Difficulty learning or understanding 

• Incomplete use of arms or fingers 

• Difficulty gripping 

• Incomplete use of feet or legs 

• A nervous or emotional condition that 

restricts everyday activities 

• Restriction in physical activities or physical 

work 

• Disfigurement or deformity 

• Needing help or supervision because of a 

mental illness or condition 

• Head injury, stroke or other brain damage 

with long terms effects that restrict 


• Treatment for any other long term 

condition, and still restricted in everyday 

activities 

• Any other long term condition that restricts 


Specific restrictions are 

Core activity restrictions; and/or 

Schooling or employment restrictions 

Core activities are: 

Self care – bathing or showering, dressing, eating, 

using the toilet and managing incontinence; 

Mobility – moving around at home and away 

from home, getting into or out of bed or chair; 

and using public transport; 

Communication – understanding and being 

understood by others; strangers, family and 

friends 

Core activity restrictions may be: 

Profound – unable to perform a core activity, or 

always needing assistance; 

Severe – sometimes needing assistance to perform 

a core activity; 

Moderate – not needing assistance, but having 

difficulty performing a core activity; and 

Mild – having no difficulty performing a core 

activity, but using aids and equipment because of 

disability 


Frequently Asked Questions 

A number of FAQs that came up in the consultations are listed below. Responses are drawn 

from the Explanatory Notes included in the ABS report Disability, Ageing and Carers: 

Summary of Findings (ABS Catalogue No. 4430.0, 1998). For those requiring further 

information, the ABS also publishes a comprehensive User Guide that gives detailed accounts 

of all aspects of the survey. 

FAQ 1: 

What constitutes moderate, severe and profound disability and other elements in the 

survey so an informed judgement can be made about its use? 

Responses: • definitions used in the 1998 DACS are given in the Box above. . 

• levels of disability are defined in terms of the impact on the individual’s 

capacity to perform or participate in a number of core activities, schooling or 

employment 

• details of core activities and levels of restriction are given in the Box above. 

FAQ 2: 

What questions were asked in the survey? 

Responses: • A screening question is first asked to identify whether any individuals in the 

household has a disability. 

• Further questions are then asked about the extent to which the disability restricts 

the individual’s capacity to carry out core activities (See User Guide for full 

schedule) 

a Questions are asked about help needed, help received from informal sources and 

from formal services from subsidised and private providers, and unmet need for 

care. 

• DACS also asks questions on accommodation, education, employment, income, 

and provision of care. 

• Further questions are asked of carers of people with disabilities. 

FAQ 3: 

Was data collected from individuals or provider organisations? If data was 

collected only from those receiving services, it is not an adequate measure of all 

need? 

Responses: • DACS involves a household survey of those living in the community. 

• A survey of “cared accommodation” is carried out to collect data on those of 

any age in residential care of any kind. 

FAQ 4: 

Do the survey definitions reflect consumers’ perspectives and do the definitions 

capture information adequately? 

Responses: • Information is collected through personal interviews with people with 

disabilities and with carers, conducted by trained interviewers. 


• In cases where the person with a disability is unable to answer, information is 

sought from another appropriate member of the household, often a co-resident 

carer 

• When necessary, interpreters were supplied wherever possible. 

• The ABS engages in extensive consultation with user groups in the course of 

developing each DACS survey, including representatives of disability and 

older persons groups. 

• The survey forms and questions are extensively trialled 

FAQ 5: 

Can rates of handicap by LGA be linked to age cohorts and level of handicap? 

Responses: • The rates of handicap used in the RREF are calculated on the basis of the age 

structure of each LGA, for all levels of handicap together. 

• Separate figures can be calculated for each level, but would be subject to 

large errors of estimate. 

FAQ 6: 

Are disability groups with Acquired Brain Injury (ABI), Attention Deficit 

Hyperactivity Disorder (ADHD), chronic illness and mental health problems 

included in the survey? 

Responses: • the disabilities included in the survey are listed in Box 2.1 

• disability is defined in terms of the consequences of illness conditions for 

functioning rather than on the basis of diseases 

• both mental and physical conditions leading to disability are included 

• the requirement that the disability has lasted or is likely to last for 6 months 

distinguishes chronic conditions from short term and acute health problems 

FAQ 7: 

Is the sample size large enough to provide reliable estimates at LGA level? 

Responses: • The 1998 sample obtained responses from 15,300 dwellings and covered 

37,951 persons, and 400 cared accommodation establishments with 5,716 

residents. 

• The response rate for households was 94.4% 

• This sample size was determined so as to enable statistically reliable 

estimates of the numbers of people at each level of disability by age and 

gender nationally, in each state, and by LGA . 

FAQ 8: 

Is the 0-4 age group included in DACS? 

Responses: • this age group was included in the 1998 survey but not in the 1993 or earlier 

DACS 


DACS 

• 2.5% of children in the 0-4 age group, or 3,700 individuals nationally, had a 

core activity restriction 


APPENDIX 3: 

variables 

LGA scaled scores and total weightings on need 

LGA 

Median 

H’hold Inc. 

YLD 

Lang other 

than English 

Koori ARIA Total scaled 

score 

% need 

weighting 

Barwon South Western 

Colac-Otway 8 4 0 1 4 17 37.8 

Corangamite 8 7 0 0 4 19 42.2 

Glenelg 7 5 0 2 6 20 44.4 

Greater Geelong 7 6 1 1 1 16 35.6 

Moyne 7 7 0 1 4 19 42.2 

Queenscliffe 8 6 1 0 1 16 35.6 

Southern Grampians 8 5 0 1 6 20 44.4 

Surf Coast 7 4 0 0 2 13 28.9 

Warrnambool 8 5 0 2 2 17 37.8 

Regional average 17.4 38.8 

Gippsland 

Bass Coast 9 5 0 0 3 17 34.0 

Baw Baw 7 5 0 1 4 17 37.8 

East Gippsland 9 5 0 7 9 30 66.7 

La Trobe 7 5 1 2 2 17 37.8 

South Gippsland 8 5 0 0 4 17 37.8 

Wellington 8 5 0 1 6 20 44.4 


Grampians 

Ararat 8 7 0 0 4 19 42.2 

Ballarat 7 6 0 1 1 15 33.3 

Golden Plains 6 4 0 0 3 13 28.9 

Hepburn 9 4 0 1 2 16 35.6 

Hindmarsh 9 7 0 1 9 26 57.8 

Horsham 8 7 0 2 6 23 51.1 

Moorabool 6 4 0 1 2 13 28.9 

Northern Grampians 8 7 0 1 5 21 46.7 

Pyrenees 9 7 0 1 3 20 44.4 

West Wimmera 9 7 0 0 9 25 55.6 

Yarriambiack 8 7 0 0 8 23 51.1 


Hume 

Alpine 8 5 2 0 6 21 46.7 

Delatite 8 5 0 1 5 19 42.2 

Greater Shepparton 7 3 1 6 3 20 44.4 

Indigo 7 4 0 0 3 14 31.1 

Mitchell 6 5 0 1 2 14 31.1 

Moira 8 7 0 1 4 20 44.4 

Murrindindi 8 5 0 1 4 18 40.0 

Strathbogie 9 7 0 1 3 20 44.4 

Towong 8 4 0 0 6 18 40.0 

Wangaratta 7 5 0 1 4 17 37.8 

Wodonga 6 4 0 1 2 13 28.9 



LGA 

Median 

H’hold Inc. 

YLD 

Lang other 

than English 

Koori ARIA Total scaled 

score 

% need 

weighting 

Loddon Mallee 

Buloke 9 7 0 0 8 24 53.3 

Campaspe 8 6 0 3 3 20 44.4 

Central Goldfields 9 7 0 0 3 19 42.2 

Gannawarra 8 6 0 2 6 22 48.9 

Greater Bendigo 8 6 0 1 2 17 37.8 

Loddon 9 7 0 0 5 21 46.7 

Macedon Ranges 4 5 0 0 2 11 24.4 

Mildura 8 6 1 4 9 28 62.2 

Mount Alexander 9 5 0 1 2 17 37.8 

Swan Hill 8 6 1 9 8 32 71.1 


Western Metro 

Brimbank 5 8 9 0 0 22 48.9 

Hobsons Bay 5 5 5 0 0 15 33.3 

Maribyrnong 8 9 9 0 0 26 57.8 

Melbourne 4 6 6 0 0 16 35.6 

Melton 4 3 1 0 0 8 17.8 

Moonee Valley 5 3 6 0 0 14 31.1 

Wyndham 3 4 3 1 1 12 26.7 

16.1 35.9 

Northern Metro 

Banyule 3 3 2 0 0 8 17.8 

Darebin 7 8 8 2 0 25 55.6 

Hume 4 9 6 1 1 21 46.7 

Moreland 7 5 8 0 0 20 44.4 

Nillumbik 0 2 1 0 1 4 8.9 

Whittlesea 4 2 8 1 1 16 35.6 

Yarra 5 5 6 1 0 17 37.8 


Eastern Metro 

Boroondara 1 1 3 0 0 5 11.1 

Knox 2 4 2 0 0 8 17.8 

Manningham 1 0 5 0 0 6 13.3 

Maroondah 4 4 1 0 0 9 20.0 

Monash 3 1 5 0 0 9 20.0 

Whitehorse 4 1 3 0 0 8 17.8 

Yarra Ranges 4 3 1 1 3 12 26.7 


Southern Metro 

Bayside 2 0 2 0 0 4 8.9 

Cardinia 5 4 0 0 1 10 22.2 

Casey 3 4 3 0 0 10 22.2 

Frankston 5 5 1 0 0 11 24.4 

Glen Eira 5 2 4 0 0 11 24.4 

Greater Dandenong 6 8 9 0 0 23 51.1 

Kingston 5 4 4 0 0 13 28.9 

Mornington Peninsula 7 5 0 0 1 13 28.9 

Port Phillip 5 6 4 0 0 15 33.3 

Stonnington 3 2 3 0 0 8 17.8 



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