Towards an Understanding of Commonwealth Social Expenditure Trends

Abstract

This paper provides a detailed summary and assessment of the analysis of trends in Commonwealth budget social and welfare programs recently undertaken by the Commonwealth Department of Finance in its Report on the Forward Estimates of Budget Outlays, 1989-90 to 1991-92. The expenditure decomposition method used in Chapter Five of that report, initially developed in the mid-seventies at the DECD, is applied to analyse the growth in expenditure on nineteen social programs since 1968-69 and their forward estimates to 1991-92. The paper outlines the framework used in public expenditure decompositions and discusses its strengths and limitations. Particular attention focuses on the importance of the variables used in the exercise and how these are measured in practice. Broad results for all nineteen social programs are then presented and discussed. A more detailed analysis of the decompositions of expenditure in three areas; Nursing Homes, the Age Pension and Assistance to Families is then undertaken to provide an illustration of the usefulness of and qualifications that apply to expenditure decomposition analysis.