Final Report on RREF 2001 - Department of Health

Part C: Outcomes
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
Population
Weighting of need
variables
Number of need
variables
Current RREF Rurality only
(1) Base 2 Even 4
(2) Base 2 Even 6
(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
(7) Base 3 Even 4
(8) Base 3 Even 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.
<strong>Final</strong> <strong>Report</strong> July 2001 74