Appendix C - Additional information on benchmarks

Additional information on benchmarks

Department of Urban Services

Output 1.2: ACT Roads and Stormwater - Method of Calculation Benchmark

Notes

Benchmarking partners in comparable jurisdictions are being established. Initial analysis has resulted in an injection for operations of $0.461m.

Measures to be used are to be agreed with the selected partners in benchmarking work to be undertaken in 1999-2000. The results are expected to be available for the 2000-01 Budget.

It is anticipated that detailed analysis will be carried out based on AUSTROADS methodologies. Depending upon availability of comparative data it is proposed that the following costs be benchmarked:

OUTPUT 1.3: Waste and Recycling
Method of Calculation of Benchmark

Notes

This benchmarking analysis is indicative only and further detailed work is required.

The following information was used to determine the comparative costs:

1. Household collections is the direct cost of the kerbside recycling, kerbside garbage and hopper collection services. Comparative information has been taken from 1998-99 Budget information in a similar jurisdiction. The comparative cost is obtained by multiplying the benchmark price by the anticipated average number of households for 1999-2000 of 118 000.
2. Landfill costs include the direct operational, management and corporate overhead costs. Comparative information has been taken from the 1998-99 budget information forwarded from a similar jurisdiction. The comparative cost is obtained by multiplying the benchmark price per tonne by the anticipated tonnes (0.233m) of waste to landfill.
3. Green waste services have not been benchmarked at this stage.
4. Cost of commissioning includes corporate overheads. Comparative information has been taken from the 1998-99 Budget information forwarded from a benchmark council. The comparative cost is determined by multiplying the benchmark by a population figure of 311 200.
5. Development control measures is a new measure for 1999-2000. Benchmark information is not available at this stage.
6. State and Strategic Waste management comparative information has been taken from the 1998-99 Budget information forwarded from a similar jurisdiction.

OUTPUT 1.4: Canberra Urban Parks and Places
Method of Calculation of Benchmark

Notes

High level analysis has resulted in an initial injection for operations of $2.030m.

A review of benchmarking information collated by the Australian Local Government Association and a preliminary review of literature commissioned by Canberra Urban Parks and Places (CUPP) indicate that no benchmarking activity has been undertaken or published in relation to either the ‘purchaser’ activities or ‘provider’ activities in the park industry.

The ‘provider’ activities are benchmarked against measures obtained from the market testing of horticultural maintenance and cleaning services in the Woden/Weston and Inner South regions in 1998-99. Further market testing will occur in 1999-2000, this will provide the best price available in the Canberra market.

Output 1.5: Information Planning and Services
Method of Calculation of Benchmark

Notes

Benchmarking partners in comparable jurisdictions are being established. Initial high level analysis has resulted in an injection for operations of $0.230m.

1. Public Library Services have been benchmarked against other public library services. Direct comparison is difficult due to the different accounting treatments applied to many costs, including those relating to indirect costs, IT and accommodation. During 1999-2000 more detailed analysis will be undertaken to enable a more accurate comparison to be made.
2. Other services have not been benchmarked due to a lack of suitable benchmarks or benchmark partners.
3. It is proposed that further benchmark partners will be established in 1999-2000 to be available for the 2000-01 Budget. Where comparable data is available, detailed analysis will be undertaken on the following cost items:

OUTPUT 2.1: Transport Services and Regulation
Method of Calculation of Benchmark

Notes

Initial high level analysis has resulted in an injection for operations of $1.160m.

In undertaking detailed benchmarking, consideration has to be given to the different ways road user services are delivered the States and Territories. With internal benchmarking, the changes in the provision of road user services over the last few years from total in-house provision towards more outsourced models has also to be considered. It is proposed that the ACT benchmark each operation with the State or Territory that delivers that service in the most comparable delivery system. Those arrangements are proposed to commence during 1999-2000 and results are expected to be available for the 2000-01 Budget. Detailed benchmarking will be undertaken, where comparable data exists, in the following areas:

The injection for operations for Output 2.1 of $1.160m is only applicable to the Road Use Management functions.

OUTPUT 5.2: Development Management
Method of Calculation of Benchmark

Notes

Benchmarking partners in comparable jurisdictions are being established. Initial high level analysis has resulted in an injection for operations of $1.550m

Measures to be used are to be agreed with the selected partners in benchmarking work to be undertaken in 1999-2000. The results are expected to be available for the 2000-01 Budget.

This is an initial assessment of an ongoing benchmarking study.

The following information was used to determine the comparative prices:

1. The Government in its submission to the Commonwealth Grants Commission recognised an additional cost of managing the leasehold system, not applicable to other jurisdictions, of $2m, this is included in the total cost $7.7m.
2. The comparative development applications is with a range of 8 councils as provided by the Independent Pricing and Regulatory Tribunal of NSW. Further work is required to unpack the cost of leasing in ACT development applications and also on an adjustment to the average cost for the eight councils noting that the attribution of indirect and overhead cost by some councils was less than full cost attribution. The comparative price was based on an estimate of 4 500 single dwelling applications and 900 other applications.
3. The total cost of $7.7m includes rent and associated costs of $0.885m being 11.5% of the activity cost which is not included in many of the councils as their premises are frequently owned. Further, the cost also includes $0.180m being the cost of public notification. The current level of public notification provided is above those of our benchmark partners but in accordance with current legislation. Approximately 60% of the Development Applications will be publicly notified.
4. The cost of Land Information includes maintenance of the Cadastre, the fundamental spatial data information and regulatory survey functions. The comparative information is based on an average of per capita and land parcels as both are considered the major contributors to the workload. The comparative information has been supplied by Western Australia. The comparative price is based on a population of 311 200 and 131 995 parcels of land.
5. The following other services are being benchmarked and will be available for the 2000-01 Budget.

OUTPUT 5.3: Licensing and Regulation
Method of Calculation of Benchmark

Notes

This is an initial assessment of an ongoing benchmarking study.

Benchmarking partners in comparable jurisdictions are being established. Initial high level analysis has resulted in an injection for operations of $0.4m

Measures to be used are to be agreed with the selected partners in benchmarking work to be undertaken in 1999-2000. The results are expected to be available for the 2000-01 Budget.

1. Audit Services has been compared to the average post approval costs of Commercial Building Applications for the eight councils used for development application Benchmarking in output 5.2. This is considered an indicative benchmark. Further work will continue over the next year on obtaining a more precise measure. The comparative cost is based on an estimate of 9 200 audits.
2. Full overhead cost attribution for all benchmark partners has not occurred. Further work will continue to ensure more comparable information is provided.

The following other services are being benchmarked and will be available for the 2000-01 Budget.

ACTION Bus Services
Method of Calculation of Benchmark

Notes

The following information was used to determine the comparative costs:

1. Consist of:
   • Costs 1999-2000 - total costs budgeted by ACTION for 1999-2000.
   • Benchmark costs - total costs calculated by the Indec study in 1996-97.
2. This amount is made up of: allowance for inflation at 1.7% ($0.717m); special needs transport ($1.837m); and additional services as a result of the new network ($2.5m).
3. This amount is made up of costs that are considered peculiar to ACTION operating as a Government owned service provider. These costs are made up of: capital related cost disability ($2.544m - excess of costs for depreciation, interest and lease rentals over the benchmark), redundancies ($0.639m), redeployees ($0.114m - excluded by Indec study), public sector reporting ($0.180m - assumed to be services to the Minister, over and above reporting to a Board), accommodation ($0.443m - excess due to public sector ownership), compensation ($0.358m), public service superannuation ($1.226m - the difference between the benchmark of 6% and the ACTION budget), taxes and charges ($3.984m) and insurance ($0.948m). These reductions are partially offset by an increase in costs as a result of transfers to the Department of Urban Services ($0.676m).
4. The total adjusted above benchmark costs of $5.628m represents the Benchmark loss of ACTION.
5. This result includes the gross amount of revenue that the Government pays for ACTION’s Service Purchase Payments, which includes ACTION’s Community Service Obligations.
6. The injection for operations represents the residual cash required to fund operations at current expenditure levels and is provided on a cash needs basis.

Department of Education and Community Services

Output 1.1: Government Primary School Education
Method of Calculation of Benchmark

Notes

1. The $716 represents the cost per student for the primary school education component of the initial government school education operating deficit.
2. The primary school proportion of the above benchmark price was derived by calculating costs associated with: diseconomies of central office; education services for children from diplomatic families; surplus space in schools; higher superannuation levels and higher salary levels for teachers.
3. The $12.401m is the primary school education component of the final government school education operating deficit.

Adjustments paid through GPO

The initial benchmark price has been adjusted to account for purchases over the average benchmark which the government is prepared to recognise and pay. The increased costs are due to:

• diseconomies of scale faced by the ACT in relation to central office costs ($1.330m); and
• the provision of free education services for children from diplomatic families, particularly in respect of those from non English speaking backgrounds requiring ESL tuition ($1.120m).

Factors contributing to final above benchmark price

Factors influencing the ACT position relative to other jurisdictions are:

• surplus space in schools;
• higher superannuation levels; and
• higher salary levels for teachers.

Output 1.2: Government High School Education
Method of Calculation of Benchmark

Notes

1. The $812 represents the cost per student for the high school education component of the initial government school education operating deficit.
2. The high school proportion of the above benchmark price was derived by calculating costs associated with: diseconomies of central office; education services for children from diplomatic families; surplus space in schools; higher superannuation levels and higher salary levels for teachers.
3. The $7.168m is the high school education component of the final government school education operating deficit.

Adjustments paid through GPO

The initial benchmark price has been adjusted to account for purchases over the average benchmark which the government is prepared to recognise and pay. The increased costs are due to:

• diseconomies of scale faced by the ACT in relation to central office costs ($0.710m); and
• the provision of free education services for children from diplomatic families, particularly in respect of those from non English speaking backgrounds requiring ESL tuition ($0.490m).

Factors contributing to final above benchmark price

Factors influencing the ACT position relative to other jurisdictions are:

• surplus space in schools;
• higher superannuation levels; and
• higher salary levels for teachers.

Output 1.3: Government Secondary College Education
Method of Calculation of Benchmark

Notes

1. The $1 074 represents the cost per student for the secondary college education component of the initial government school education operating deficit.
2. The secondary college proportion of the above benchmark price was derived by calculating costs associated with: diseconomies of central office; provision of a higher level of service in years 11 and 12; surplus space in schools; higher superannuation levels and higher salary levels for teachers.
3. The $5.423m is the secondary college education component of the final government school education operating deficit.

Adjustments paid through GPO

The initial benchmark price has been adjusted to account for purchases over the average benchmark which the government is prepared to recognise and pay. The increased costs are due to:

• diseconomies of scale faced by the ACT in relation to central office costs ($0.680m);
• the provision of a higher level of service, in comparison to other jurisdictions, for senior secondary students ($0.850m); and
• the provision of free education services for children from diplomatic families, particularly in respect of those from non English speaking backgrounds requiring ESL tuition ($0.390m).

Factors contributing to final above benchmark price

Factors influencing the ACT position relative to other jurisdictions are:

• surplus space in schools;
• higher superannuation levels; and
• higher salary levels for teachers.

Output 1.4: Government Special Education
Method of Calculation of Benchmark

Notes

1. The $4 887 represents the cost per student for the special education component of the initial government school education operating deficit.
2. The special education proportion of the above benchmark price was derived by calculating costs associated with: diseconomies of central office; higher levels of service in special schools and mainstream schools; higher superannuation levels and higher salary levels for teachers.
3. The $2.198m is the special education component of the final government school education operating deficit.

Adjustments paid through GPO

The initial benchmark price has been adjusted to account for purchases over the average benchmark which the government is prepared to recognise and pay. The increased costs are due to:

• diseconomies of scale faced by the ACT in relation to central office costs ($0.280m);
• the provision of a higher level of service, in comparison to other jurisdictions, for students with disabilities in special schools ($3.340m); and
• the provision of a higher level of service, in comparison to other jurisdictions, for students with disabilities in mainstream schools ($0.940m).

Factors contributing to final above benchmark price

Factors influencing the ACT position relative to other jurisdictions are:

• higher superannuation levels; and
• higher salary levels for teachers.

Output 3.2: Purchase of Vocational Education and Training Services through the Canberra Institute of Technology
Method of Calculation of Benchmark

Notes

1. This reflects the difference between the ACT cost per adjusted Annual Scheduled Hour of Curriculum ($15.60) and the Australian average cost per Annual Hour of Curriculum ($11.40). This difference is applied to CIT employee expenses to obtain the above benchmark price.
2. This reflects the difference between the ACT cost per adjusted Annual Scheduled Hour of Curriculum ($15.60) and the ACT cost per adjusted Annual Hour of Curriculum ($14.30). This difference is applied to CIT employee expenses to obtain the reduction in the above benchmark price.

Adjustments paid through GPO

The initial benchmark price has been adjusted to account for purchases over the average benchmark which the government is prepared to recognise and purchase. The GPO has been adjusted to recognise all annual curriculum hours delivered.

Factors contributing to final above benchmark price

There are a number of factors that have contributed to CIT costs being higher than other jurisdictions. These are:

• higher superannuation costs;
• higher delivery and learning support costs;
• the comparatively larger number of campuses; and
• the disproportionately high number of small courses.

Justice and Community Safety

OUTPUT 2.1: Administration of Justice
Method of Calculation of Benchmark

Notes

1. Australian average "All Courts Total Expenditure per Capita".
2. This reflects the difference between the ACT’s All Court Total Expenditure per Capita ($40) and the Australian average All Court Total Expenditure per Capita ($32) multiplied by the ACT population as at 30 June 1997 ie $8 x 309,000 = $2.472m. The $2.472m reduces the agency’s 1999-2000 budgeted GPO to indicate an average price for an average level of service. However, in order to maintain current output levels, the budgeted cash needs of this agency for this output are provided through both an Injection for Operations of $0.270m for 1999-2000 and a reduction of $0.369m in the 1998-99 accrued revenue from Government.

Factors influencing the ACT’s position relative to other jurisdictions are:

• the Magistrates Court operating out of a new leased building (at $2.5m per annum) and the high maintenance cost of the Supreme Court building;
• different treatment of depreciation costs of buildings between jurisdictions;
• population size of the ACT means some economies of scale are foregone;
• absence of an intermediate court means the Supreme Court has a higher proportion of criminal cases than its counterparts, these cases are more costly on average but are finalised more expeditiously;
• the ACT Magistrates Court deals with more criminal and civil cases, especially workers compensation, than other jurisdictions;
• the presence of the Commonwealth in the ACT contributes significantly to the territory’s costs in terms of civil and criminal cases in all Territory Courts, and
• the ACT incurs additional costs from its proximity to NSW and its role as a regional centre. Of the 1050 civil cases commenced in the Supreme Court, 65% have at least one interstate party. Consequently, the ACT’s total court costs are greater than in other States where such cases are dealt with in District/County Courts.

The ACT Magistrates Court is below the national average on a cost basis in respect of both its Civil and Criminal jurisdictions once minor matters are discounted:

The benchmark applied is an interim one and will require further refinement/negotiation during 1999-2000.

OUTPUT 2.2: Correctional Services
Method of Calculation of Benchmark

Notes

1. Australian average "Cost per prisoner per day – all prisons".
2. This reflects the difference between the ACT’s cost per prisoner day – all prisons ($182.20) and the Australian average cost per prisoner day – all prisons ($140.90) multiplied by the total number of prisoners/remandees/detainees days as at 30 June 1998 (ie $41.30 x 60 171 = $2.485m). The $2.485m reduces the agency’s 1999-2000 budgeted GPO to indicate an average price for an average level of service. However, in order to maintain current output levels, the budgeted cash needs of this agency for this output are provided through both an Injection for Operations of $2.481m for 1999-2000 and a reduction of $3.395m in the 1998-99 accrued revenue from Government.

Factors influencing the ACT’s position relative to other jurisdictions are:

• the ACT does not have its own facility for sentenced prisoners and all prisoners are sent to NSW prisons for incarceration. The charge that the NSW levies on the ACT for this service has consistently risen by 5% each financial year; and
• the poor/inefficient design of the Belconnen Remand Centre, requiring a high staff:detainee ratio.

The benchmark applied is an interim one and will require further refinement during 1999-2000.

OUTPUT 4: Emergency Management
Method of Calculation of Benchmark

Notes

1. Australian average "Expenditure per Person for Fire and Ambulance Services".
2. This reflects the difference between the ACT’s expenditure per person for fire and ambulance services ($99) and the Australian average expenditure per person for fire and ambulance services ($88.12) multiplied by the ACT population as at 30 June 1997 (ie $10.88 x 309,000 = $3.362m). The $3.362m reduces the agency’s 1999-2000 budgeted GPO to indicate an average price for an average level of service. However, in order to maintain current output levels, the budgeted cash needs of this agency for this output are provided through an Injection for Operations of $0.518m for 1999-2000 and a reduction of $0.708m in the 1998-99 accrued revenue from Government.

Factors influencing the ACT’s position relative to other jurisdictions are:

• the reported results for the ACT reflects the full accrual cost of the provision of all emergency management activities including the Territory Emergency Services (TES) and a wider range of rescue functions, not just fire and ambulance services as reported by other jurisdictions;
• some municipal (local government) costs are associated with the provision of rural fire services;
• national capital influences relating to planning and high risk Commonwealth properties and the high level of user charges paid by the Commonwealth for fire protection, do not apply to the same extent in other jurisdictions and the resulting expenditure increases the ACT’s result by approximately 20% as compared to the Australian populated weighted average for these components and;
• the ACT’s unique configuration of its emergency management service delivery arrangements and the difference in structures, clients, available inputs, price and geography across jurisdictions complicates comparison.

The benchmark applied is an interim one and further research on the implications of the disparity of the comparison between the ACT and other jurisdictions is required during 1999-2000, including further negotiation/refinement of SCRCSSP benchmark data.

THE CANBERRA HOSPITAL

The hospital’s injection for operations of $12.221m in 1999-2000 is based on the comparative pricing information gathered for the 1998-99 budget and forward estimates from 1998-99 for 1999-2000.

Method of Calculation of Benchmark

Notes

1. Consists of:

• Costs 1999-2000 - total costs net of own source revenue.
• Benchmark costs - total costs net of own source revenue and a benchmark adjustment of 16.2% (percentage by hospital expenditure exceeded standardised expenditure as reported in Commonwealth Grants Commission report).
• Comparison with benchmark costs - is the difference between the cost and the benchmark cost. Injection for operations is the cash required to fund operations at current expenditure levels and is provided on a cash needs basis.