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Investment modelling involves analysing cross-agency linked data to forecast future social outcomes and service costs associated with groups of children, young people and families in NSW. Resources are then invested in areas with the greatest opportunities to improve social and fiscal outcomes.

2018 Insights Report

The Forecasting Future Outcomes – 2018 Insights Report presents insights from an unprecedented human services data set with integrated, de-identified data from across 10 NSW Government departments and agencies.

The Report defines six vulnerable population groups estimated to have the poorest future social and fiscal outcomes. Each vulnerable group is analysed alongside a comparison group without vulnerability, to highlight the likelihood of poorer outcomes and the difference in estimated cost of providing government services.

Key findings

The 2018 Insights Report presents many powerful insights never before quantified in NSW. Key findings include:

  • Services used up to age 40 by the study population (representing NSW children and young people aged under 25 as at 30 June 2017) are forecast to cost the NSW and Commonwealth governments $428B
  • Welfare is the largest component of future support costs (56%), followed by health services (25%) and justice costs (8%)
  • 7% of the study population make up 50% of the total future support cost ($54 billion, up to age 40) for NSW services
  • Risk factors (for example, ‘parent has interacted with the justice system’ or ‘mother smoked during pregnancy’) can be used to project social outcomes and future support costs – groups with a higher number of risk factors project to higher future service costs and poorer social outcomes.

How the insights will be used

Drawing on these insights, and the best available evidence, our strategic commissioning role involves partnering to design and evaluate strategies that support children and families to reach their goals and improve their outcomes.

The Their Futures Matter Implementation Board has endorsed the creation of a coordinated state-wide cross-agency strategy, led by Their Futures Matter and involving all human services agencies, for the following two population groups:

  • Vulnerable children and young people affected by mental illness
  • Vulnerable young children aged 0-5 years

How the data are analysed

Predictive modelling and analysis were undertaken by analytics and actuarial consultancy Taylor Fry, using the NSW Human Services Data Set. Insights from this modelling are presented in the NSW Human Services Investment Modelling – 2018 Insights Report.

Age limits

This data set contains linked administrative data for all children and young people aged under 25 on 30 June 2017, who were born in NSW or have resided in NSW prior to this date.

Service use and outcome pathways have been projected up to age 40 for all people in the study population. There are several reasons for this upper age limit:

  • The oldest person in that dataset at the time of preparing the analysis was 28 and so there was no service use history beyond age 27. Taylor Fry were able to obtain service use data up to age 40 from their Phase 1 modelling work for Their Futures Matter, which allowed them to extrapolate the results from age 28 to 40. Extrapolation beyond age 40 was considered highly speculative.
  • Beyond age 65, there is a transition away from costs associated with poor social outcomes (e.g. child protection or justice costs) to costs that are dominated by age effects (particularly health).
  • By accounting for changes in cash flow values over time, the material importance of older cash flows in the cost estimates declines.

Modelling individual pathways

Central to the analysis was the creation of a ‘pathway view’ of social outcomes and government service use for each individual born on or after 1 January 1990. By pathway view we mean, for each individual, creating a summary of key outcomes and service use that occurred in each quarter of a year from birth until the end of the 2016–17 financial year.

The model used to forecast future social outcomes and service use is an individual-level simulation (microsimulation) that projects pathways through childhood and adulthood up to age 40.

The model also recognises that future outcomes and government services depend on individual and family characteristics and family circumstances. Therefore, the modelling includes a range of characteristics that drive differences in forecasts of outcomes and service use.

Read section 3 of the NSW Human Services Investment Model – 2018 Insights Report for more detail on the modelling approach.

Investment model visualisation tool

This visualisation tool is a companion to the Forecasting Future Outcomes: 2018 Insights Report. It should only be used after reading Sections 1 to 5 and Section 10 of that report. Those sections describe the approach and define key terms used in the dashboard.

The dashboard presents results for five vulnerable groups presented in the report. However, in line with the report, two of the vulnerable groups have been separated into subgroups for the Fiscal Outcomes and Future Outcomes tabs. On these tabs, the 'Young mothers and their children' group has been separated into a 'Young mothers' group and a 'Children of young mothers' group. Also, the 'Children and young people affected by mental health' group has been separated into a 'Young adolescents with parental mental health risk factors' group and a 'Vulnerable young people transitioning to adulthood affected by mental health' group.

TFM Data Snapshot: Priority Populations

The new TFM Data Snapshot provides an updated summary about the costs related to groups with vulnerable characteristics across NSW. The snapshot also shows the cumulative costs of servicing groups of people with multiple vulnerabilities. It is designed to assist TFM stakeholders by providing clear information from the largest study of its kind in Australia.