Final Report on RREF 2001 - Department of Health

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