Human Services and Cost Indexation Methodologies in Australia

This paper has been produced to allow access to digestible information relating to cost indexation of human services. It provides descriptions of cost indices, their backgrounds and relevance and gives insight into use and appropriateness of these resources. It is a technical document and is provided to support other outputs of the Centre for Public Value. Current and proposed methodologies are discussed for relevance to the human services sector. A human services sector specific index is supported by an international example. Detail of this index’s compilation encourages a streamlined approach by index analysts. Dynamics and frameworks of human services organisations are discussed for clarity and
distinction from for-profit or household comparison. Services provided by uman services organisations are not optional for individuals and communities. Hence inappropriate funding creates barriers to access hindering the wellbeing of an individual. Challenges and opportunities for data collection for indexation are reviewed. Dependent on resources, best fit methodology and analysis are considered. Technical detail is provided for methodology. Risks, outlier removal, and weighting equations are included for reference, as well as data collection frequency requirements. Methodologies for analysis by way of formula are reviewed by current standards. The Fisher Ideal Index is proposed as an alternative formula to best support non-homogenous sectors and remove biases otherwise distorting indices from intended representation. Additional information and data collection requirements are identified and discussed. This is significant for measurement and monitoring of the sector and informed decision making by both policy makers and the organisations. For any further queries on the document the authors would be delighted to further discuss for
any clarity or questions which may arise in the use of this report.