Details of the Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 4) Regulations 2019

 

Section 1 - Name

 

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 4) Regulations 2019.

 

Section 2 - Commencement

 

This section provides that the Regulations commence on the day after the instrument is registered on the Federal Register of Legislation.

 

Section 3 - Authority

 

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

 

Section 4 - Schedules

 

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedule to the Regulations.

 

Schedule 1 - Amendments

 

Item 1 - Part 4 of Schedule 1AB (table item 333, column headed "Objective(s)", subparagraph (a)(ii))

Item 2 - Part 4 of Schedule 1AB (table item 333, column headed "Objective(s)", subparagraph (g)(i))

 

Items 1 and 2 amends existing table item 333 in Part 4 of Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997.

 

Table item 333 establishes legislative authority for government spending to assist non-government and private sector organisations to make and evaluate social impact investments. Table item 333 commenced in February 2019. This initiative is administered by the Department of Social Services (the department).

 

The 2018-19 Budget included funding of $6.7 million over four years for the 'Building Outcome Measurement Capacity in the Social Impact Investing Market' budget measure (Outcomes Measurement Initiative) to help build the capacity of the social impact investing sector to measure outcomes in order to attract investment.

 

Australian social impact investing (SII) is an innovative method of financing interventions to address intractable social or environmental problems. SII brings together governments, service providers and investors to leverage private capital to create measureable improvements in social or environmental outcomes, often paying a financial return when successful.

 

The Outcomes Measurement Initiative will be implemented through two projects.  The first project (Project One), to be supported by this amendment to table item 333, will provide funding for up to three social impact organisations to scale a successful business and analyse each organisation's outcome and impact measurement approach. This analysis will be shared with the SII sector through case studies. The second project (Project Two), to be implemented separately, will develop an outcome and impact measurement approach to support the sector to navigate existing measurement tools and resources.

 

Organisations funded under Project One will each receive $416,000 per year from 2019-20 to 2021-22. Funding will support:

• scaling-up of their business or service, and
• outcome and impact measurement of their scaled service.

 

Item 1 amends table item 333 to allow the funded organisations to attract grants or donations as currently the funding under existing table item 333 does not provide for funding to an organisation that does not derive income but rather relies on government support and philanthropic donations.

 

The amendment also allows the Commonwealth to fund Global Sisters, one of the organisations approved under Project One. Global Sisters will use the funding to scale its service delivery and share learnings of service outcomes and impact with the Australian SII sector, including its approach to measuring outcomes and impact.

 

Item 2 amends table item 333 to provide constitutional heads of power that are specific to the activities that Global Sisters will be funded to deliver.

 

Global Sisters delivers a three-year program that enables women to turn an idea into a sustainable business. It targets women who are limited by circumstances, isolated or excluded from mainstream employment. In the past it has focused on migrant women and is in the process of shifting its target cohort to single mothers and women over 50 years of age. Global Sisters does not derive income from its activities, rather, it relies on government support and philanthropic donations.

 

Funding will be provided to Global Sisters to:

*         expand to new locations (this will include business viability planning and impact considerations of potential locations);

*         develop a new app, which would deliver training modules to participants in the initiative and would enable real time data collection, to feed into case study reports made to the Government;

*         redevelop its social impact measurement framework and data collection plan to improve evaluation; and

*         collect insights and lessons learned from these scaling and evaluation activities to inform development of a case study that will be made available to the social impact investing sector.

 

Funding will be provided over three years to establish a new, or expand an existing, business or service that generates positive outcomes for its target cohort ('scale their business or service'). This may involve, but is not limited to, establishing:

• a new site of operation of the existing business or service in a new location;
• a new initiative related to the existing business or service; or
• a social franchise model of an existing initiative.

 

Global Sisters and the other organisations selected will also undertake analysis of the outcomes and impact generated by the business or service, including the measurement approach taken. This analysis will be used to develop case studies on the funded organisations' outcomes and impact measurement approaches and service outcomes to share learnings across the SII sector.

 

In Australia, there is currently a nascent SII market. While there are some examples of SII, there are significant barriers preventing further investment opportunities from coming to market. Specifically, many for-purpose organisations currently do not have the skills or capabilities to define, measure and communicate their social outcomes. This is problematic as measurement and evaluation are critical for governments to assess outcomes and efficacy, and for investors to assess risk and financial returns.

 

While internal evaluation of programs is commonplace, metrics often focus on outputs rather than outcomes, with a short-term rather than long-term focus. As a result, stakeholders have repeatedly expressed the need to build specific, outcome measurement capacity in the SII sector. Building the outcome measurement capacity of the SII sector has the potential to create scalable growth of the SII market by improving organisations' ability to prove their social impact and attract investment.

 

The Outcomes Measurement Initiative is part of the Government's broader $57.7 million commitment to growing the SII market, announced since the 2017-18 Budget. This commitment represents early involvement by the Government in SII, with a focus on building the capacity of the SII market and trialling different ways to support SII initiatives in Australia.

 

Other funded measures include:

*         $8 million to establish a SII Sector Readiness Fund to enhance sector capability to overcome barriers to entering the SII market;

*         $22.3 million to partner on state and territory governments led social impact investment opportunities;

*         $15.7 million to establish a payment-by-outcomes contract trial directly between the Government and a service provider partner; and

*         $5 million to establish a SII Taskforce in the Department of the Prime Minister and Cabinet, which will examine the Morrison Government's role in the social impact investing market.

 

Funding for the organisations under Project One will be made available through a targeted, non-competitive grants process overseen by the Community Grants Hub, conducted in accordance with the Commonwealth Grants Rules and Guidelines 2017 (CGRG). The grant opportunity guidelines for this grant were provided directly to the invited organisations.

 

Applications for this grant have undergone an assessment process, which assessed each eligible and compliant application on its individual merit, including how well it meets the grant opportunity guidelines. Following assessment, the department developed a shortlist and made recommendations to the Minister for Families and Social Services (the Minister). The Minister is the decision-maker for funding decisions for this grant opportunity and has approved the organisations which may receive funding pending this amendment to table item 333.

 

The outcome of all grants awarded and funding rounds will be published on GrantConnect no later than 21 working days after the grant agreement takes effect, in accordance with the CGRG.

 

Independent review of the funding decisions is not considered to be appropriate. The funding available for this component of the Outcomes Measurement Initiative is specifically allocated across four financial years. Any delay to the administration of the funding may result in a loss of funding available to support organisations. This would undermine the grant process and negatively impact the security of future funding for successful organisations. A decision in relation to the funding amount will also be influenced by the number of organisations funded. As such, there is only a finite amount of resources available and an allocation that has been made to another party would be affected by a review overturning the original decision.

 

The guaranteed right of review under section 75(v) of the Australian Constitution, and review under section 39B of the Judiciary Act 1903, would still be available. Applicants will be notified in writing of the outcomes of their applications. Unsuccessful applicants will be offered feedback on their applications. People affected by administration decisions would also have recourse to the Commonwealth Ombudsman where appropriate.

 

Funding of $6.7 million was included in the 2018-19 Budget under the measure 'Social Impact Investing - building outcome measurement capacity' for a period of four years commencing in 2018-19.

 

Funding for this measure comes from Program 1.10, Working Age Payments, which is part of Outcome 1. Details of the Program 1.10 are set out in the Portfolio Budget Statements 2018-19, Budget Related Paper No. 1.15, Social Services Portfolio, pages 23-28.

 

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following constitutional powers:

*         the communications power (s 51(v) of the Constitution)

*         the census and statistics power (s 51(xi) of the Constitution)

*         the external affairs power (s 51(xxix) of the Constitution)

*         the executive power and the express incidental power (sections 51(xxxix) and 61).

 

Communications Power

 

Section 51(v) of the Constitution empowers the Parliament to make laws with respect to 'postal, telegraphic, telephonic and other like services'.

 

Funding for Global Sisters will support projects aiming to create better outcomes for women that will be delivered online or via a telephone service.  For example, this will include the development of a new app to enable Global Sisters to provide support to vulnerable women to turn an idea into a sustainable business. 

 

 

 

Census and Statistics Power

 

Section 51(xi) of the Constitution empowers the Parliament to make laws with respect to 'census and statistics'.

 

Table item 333 will authorise expenditure for Global Sisters to develop technical infrastructure and tools that integrate and link statistical data, as well as the collection of information for statistical purposes.  For example, Global Sisters will redevelop their social impact measurement framework and data collection plan to improve evaluation of the scaled business and collect insights and lessons learned from these scaling and evaluation activities to inform the development of a case study that will be made available to the social impact investing sector.

 

External Affairs Power

 

Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'. The external affairs power supports legislation implementing Australia's obligations under international treaties to which it is a party.

 

Convention on the Elimination of All Forms of Discrimination against Women

Australia has obligations relating to the elimination of all forms of discrimination against women under the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). In particular:

 

*         Article 2 requires State Parties to 'condemn discrimination against women in all its forms' and 'agree to pursue by all appropriate means and without delay a policy of eliminating discrimination against women'.  Article 2(b) provide that State Parties undertake to adopt 'appropriate legislative and other measures' towards this outcome.

*         Article 3 provides that State Parties 'shall take in all fields, in particular in the political, social, economic and cultural fields, all appropriate measures, including legislation, to ensure the full development and advancement of women , for the purpose of guaranteeing them the exercise and enjoyment of human rights and fundamental freedoms on a basis of equality with men'.

*         Article 10 requires State Parties to take 'all appropriate measures to eliminate discrimination against women in order to ensure to them equal rights with men in the field of education and in particular to ensure, on a basis of equality of men and women' and to ensure that 'the same conditions for career and vocational guidance, for access to studies and for the achievement of diplomas in educational establishments of all categories in rural as well as in urban areas; this equality shall be ensured in pre-school, general, technical, professional and higher technical education, as well as in all types of vocational training' as well as 'the elimination of any stereotyped concept of the roles of men and women'.

*         Article 11 provides that State Parties shall 'take all appropriate measures to eliminate discrimination against women in the field of employment in order to ensure, on a basis of equality of men and women, the same rights'.

 

Funding Global Sisters is aimed at addressing the barriers to economic participation and to assist women who are starting or running businesses and to give them the support needed to access the same opportunities as would otherwise be afforded to men.  Given this, funding Global Sisters would assist in fulfilling Australia's obligations under the above listed CEDAW articles.   

 

Executive power and express incidental power

 

The express incidental power in section 51(xxxix) of the Constitution empowers the Parliament to make laws with respect to matters incidental to the execution of any power vested in the Parliament, the executive or the courts by the Constitution. The executive power in section 61 of the Constitution supports activities that form part of the ordinary and
well-recognised functions of government.

 

Funding may be provided for the evaluation of the outcomes and impacts of funded services and businesses. Data and findings collected through these evaluations would then be used to inform Government policies.

 

 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 4) Regulations 2019

 

This Disallowable Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Disallowable Legislative Instrument

 

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations. Schedule 1AA and Schedule 1AB to the Regulations specify the arrangements, grants and programs. The FF(SP) Act applies to Ministers and the accountable authorities of non-corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

 

The Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 4) Regulations 2019 amends existing table item 333 to establish legislative authority for government spending to organisations to conduct and evaluate the effect of activities (known as social impact investments) that are intended to generate income or attract investment for the organisation. This amendment will allow for funding to Global Sisters to scale its service delivery and implement a new outcome and impact measurement framework under the 'Social Impact Investing - Building Outcome Measurement Capacity' (Outcomes Measurement Initiative) budget measure.

 

The Government announced the Outcomes Measurement Initiative in the 2018-19 Budget to build the capacity of the Australian Social Impact Investing (SII) sector to better understand, define and measure its outcomes and impact. This initiative involves funding up to three well-established organisations operating in the SII sector to establish a new, or expand an existing, business or service that generates positive outcomes for its target cohort.

 

Organisations will undertake analysis of the outcomes and impact generated by the business or service, including the measurement approach taken. This analysis will then be used to develop case studies to inform future government SII policy and share lessons learned across the SII sector.

 

The Minister for Families and Social Services has portfolio responsibility for this initiative, which will be administered by the Department of Social Services.

 

 

 

 

Human rights implications

 

This instrument engages the following rights:

*         the right to work and rights at work - Article 6 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), Articles 1 and 2 of the International Labour Organisation's (ILO) Employment Policy (ILO Convention 122) and Article 11 of the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW).

 

The right to work and rights at work

 

The right to work includes the right of everyone to the opportunity to gain his or her living by work, which he or she freely chooses or accepts. Rights at work include the enjoyment of just and favourable conditions of work, and to form and join trade unions.

 

This instrument engages the rights contained in Article 6 of the ICESCR and Articles 1 and 2 of ILO Convention 122. This initiative also engages Article 11 in the CEDAW.

 

This instrument promotes these rights by allowing government to fund Global Sisters, who support highly disadvantaged women to move from welfare and underemployment to self‑employment by creating viable small businesses.

 

Conclusion

 

This instrument is compatible with human rights because it promotes the protection of human rights.

 

Senator the Hon Mathias Cormann

Minister for Finance