Centrelink Annual Review 2002-03

Centrelink Annual Review 2002-03

Comments and requests for further information on this review are welcome and can be sent to:

Corporate Communication Manager

Centrelink Communication,

Media and Marketing

PO Box 7788

Canberra Business Centre

ACT AUSTRALIA 2610

Telephone: (02) 6284 6468

Email:

The Annual Review is a ‘short form' overview only.

It is designed to give a concise summary of Centrelink's activities and financial position for the year ended 30 June 2003. Both the Annual Report and this Annual Review may be accessed through the internet at

Centrelink is an AustralianGovernment agencydelivering a range of servicesto the community.This review is drawn fromthe Centrelink Annual Report2002–03. It describes ourperformance in the2002–03 financial yearand highlights ourplans for the future.

From our Chairman

The past year has seen the delivery of many of the key elements of Australians Working Together.

In September, after an intensive training program, 456 Personal Advisers began providing individual assessment and referral services to customers. Within weeks, it was clear that Centrelink Personal Advisers were making a positive difference to the lives of customers.

By the end of October, Centrelink was focused on a new area of support to Australians— assisting the victims and families of the Bali nightclub bombings. This tragic event brought ordinary Australians face to face with the reality of terrorism. The Board is immensely proud of the way Centrelink, working closely with other Australian Government agencies, mobilised resources to arrange and fund urgent travel and other assistance for affected individuals and their families.

This year Centrelink has also played a significant role helping Australian farmers cope with one of the most prolonged and damaging droughts in recent memory.

Centrelink's capacity to respond quickly, professionally and flexibly to the unexpected again demonstrated the benefits to the community of the Australian Government's establishment and continued investment in the Agency.

To enable the Board to assure itself that Centrelink continues to offer government excellent value for money and best practice performance, the Board commissioned the Boston Consulting Group to undertake a cost efficiency review of Centrelink. The review concluded that Centrelink has delivered efficiency gains of approximately 21 per cent since its establishment, which compares very favourably with gains achieved by similar private sector network businesses over the same period. The fact that this was achieved against a background of considerable improvement in customer and staff satisfaction, and continued progress in meeting client agency key performance indicators, is particularly satisfying. There were also recommendations for further improvement, which Centrelink has moved to implement.

In July 2002, the Minister made three new appointments to the Centrelink Board: Susan Rapley, Elizabeth Montano and David de Carvalho. All three have brought valuable skills and experience to the Board. I would like to formally welcome them and to thank all my fellow Board members for the commitment and skill they have brought to Centrelink.

I would also like to thank Sue Vardon and her leadership team for their commitment, adaptability and capacity for leadership over the year. I need also to acknowledge the dedicated people who work for Centrelink and whose genuine day-to-day commitment to their customers makes an important difference to the lives of many of our fellow Australians.

John Pascoe AO

CHAIRMAN OF THE BOARD

From our Chief Executive Officer

Since its creation in 1997, Centrelink has focused very much on transforming the way Government services are delivered to the community. This improvement in service delivery has resulted in strong growth in overall customer satisfaction. In our November 2002 survey, customer satisfaction reached a new high of 85.5 per cent. This represents a 10 per centage point increase since Centrelink was established in 1997. At the same time the organisation has achieved remarkable efficiency gains, returning a cumulative $1.086 billion in efficiency dividends to government.

Early in 2002, the Centrelink Board decided to review Centrelink's organizational efficiency and commissioned a comprehensive report from an independent consultant,the Boston Consulting Group.

The report found that:

• over the last four years Centrelink has reduced the cost of services delivered by 21 per cent per workload unit
• Centrelink's improvement in cost efficiency is within the range achieved by Australian banks over the same period
• Centrelink service costs compare favourably with the costs of processing comparable financial services products
• customer and staff satisfaction has improved over the period as has the proportion of client agency key performance indicators met
• corporate and property expenses are low by public sector standards and generally in line with private sector comparisons.

There were also recommendations for improvements including:

• developing better cost-related performance management information across the network
• using better systems for identifying and implementing internal best practice
• working with client departments to reduce the cost and frequency of notifiable events, noting that these account for over 40 per cent of Centrelink's costs
• creating tighter linkage between improvement projects and effective implementation.

Centrelink welcomed the recommendations and is well advanced in their implementation. Work in respect of better understanding our costs and cost drivers, for example, is very well progressed in the form of the Strategic Cost Management model. The benefits of Strategic Cost Management are also being applied to a new cost-based reporting framework that will drive performance improvement at all levels across the organisation.

There were also findings in respect to our Information and Technology (I&T) capability noting that our costs in this area were low relative to the investments made by comparable industries. Increasingly we need to draw on our I&T capabilities to improve customer service and enhance our operational efficiency. The review concluded that this meant Centrelink may not be well positioned for likely future demands. We were, therefore, very pleased that in the 2003-04 Budget, the Government committed $312 million over five years to enable a major upgrade and modernisation of Centrelink's IT systems. This investment will give us faster, smarter systems. It will enable us to offer our customers more choice about how they access our services and it will make it much easier for business and the community sector to deal with us.

In designing our future capability we are taking into account research that has shown that customers present to organisations with one of three levels of service need:

• low intensity, characterised as ‘Just Do It', requiring a transactional response which can often be completed by technological means
• medium intensity, ‘Help Me', indicating the need to ‘fix a problem', which usually requires a combination of people and technology, often over the telephone or internet
• high intensity, ‘Relate To Me', where a ‘person-focused response' is required, one that is based on a good understanding of the individual's circumstances and needs at that time.

In reporting on our efficiency gains and customer service improvements, I acknowledge the contributions of Centrelink staff. Our staff's commitment to continuous improvement and their willingness to embrace change to the way we do business has enabled Centrelink to evolve into the customer-centric organisation we are today. The challenge of change and the drive for further improvements is ongoing. During 2003, a new certified agreement, Centrelink's third, was successfully negotiated. The 2003-05 Centrelink Development Agreement delivers substantial improvements for customers and for employees. One of the most important benefits for customers will be extended opening hours. From 2003-05 we will progressively increase our office opening hours by 12.5 per cent.

Customers and client agencies will be assured of improvements in quality through strong support in the agreement for employee learning. Employees in turn are rewarded in the agreement through higher pay and will benefit from access to nationally recognised training.

Our priorities

Centrelink's Future Directions 2003-06, effective from 1 July 2003, recognises the four key priorities set for us by Senator Amanda Vanstone, Minister for Family and Community Services. These are:

• protecting the integrity of outlays
• supporting participation outcomes
• providing more flexible service for business, customers and government
• demonstrating that we provide value for money.

Centrelink will deliver on these four key challenges through implementation of the five goals and associated strategies of Future Directions 2003-06.

Protecting the integrity of outlays

Centrelink, working with our client agencies, has a large role in protecting the integrity of outlays. Our role is one of ensuring that the approximately $55 billion we pay out to our customers is paid correctly. It is essential that Centrelink be seen as a good steward of taxpayers' funds so that the public continues to have confidence in the social security system.

Implementation of strategies to achieve this include ensuring Centrelink has a skilled workforce, streamlining and re-engineering of processes and improving the effectiveness of our interactions with business. We are also working closely with our colleagues in the Department of Family and Community Services to simplify the payments system.

Centrelink's compliance activities are specifically aimed at the prevention, detection and deterrence of incorrect payments and fraud to ensure customers are receiving their correct entitlements. The mechanisms Centrelink uses to detect incorrect payments and fraud include:

• identity checks
• data-matching with information held by Centrelink or obtained from other agencies
• tip-offs provided by the public
• inter-agency compliance activities
• selecting customers for review on the basis of risk or as part of random sample surveys.

In 2002-03 Centrelink continued its emphasis on payment correctness throughout the year with an initiative called Getting It Right: ensuring that every time we make a payment we pay the right person, under the right program, at the right rate from the right date. During 2002-03, a number of products and tools were developed and enhanced to provide continued support for staff to assist in the accuracy and correctness of their decision.

We also improved our quality control tool, Quality On Line (QOL), which is used to check the accuracy of pension and benefit payments. Staff with checking responsibilities received better training in using the QOL tool and this has resulted in greater accuracy across the board enabling assessing staff to receive timely feedback on their work.

Supporting participation outcomes

As a result of Australians WorkingTogether, our efforts will increasingly be targeted to helping our customers achieve social and economic participation. While in the past Centrelink's role has mainly focused on providing income support, increasingly our role will change to one of helping customers to engage more productively with their communities, especially through the labour market. This will lead to the achievement of a greater degree of independence and better long-term outcomes for themselves and their families. To do this we will need to build stronger relationships and work more closely with the business and community sectors.

In doing this work Centrelink cannot afford to be isolated from the environment in which it operates. We need to be part of the communities in which we work and we need to be more active in ensuring that all parties involved in assisting individuals or families, whether they are in the Commonwealth, State or non-government sectors, collaborate effectively. Together we need to ensure our mutual customers, particularly those with complex needs, do not fall though the gaps or find themselves on a welfare merry-go-round, constantly needing to retell their stories.

Implementation of strategies to achieve this include better managing the referral process, better follow up and ensuring our staff have the tools, knowledge and business intelligence to meet the challenge.

In 2002-03, one of the major Australians Working Together initiatives was the introduction of Personal Advisers, who started work on 1 July 2002. They have been specially trained by Centrelink to help individual customers identify their particular challenges and put them in touch with the most appropriate form of assistance for the circumstances. The evidence to date is that the initiative is working extremely well.

Centrelink commissioned a pilot customer survey between March and June 2003, asking around 2500 customers for their view on the service offered by the Personal Advisers.

The preliminary results found a very high level of support and approval:

• 74 per cent of customers surveyed agreed that they felt more motivated about finding work or participating in their local communities
• 91 per cent of customers surveyed agreed that they found the Personal Adviser service to be helpful
• 76 per cent of customers surveyed agreed that they felt more positive about their ability to make changes to the way they go about looking for work or becoming involved in their local communities
• 77 per cent of customers surveyed felt better prepared in their efforts to find work or become involved in their local communities
• 95 per cent of customers surveyed rated their Personal Advisers as either Good or Very Good in terms of: being treated as individuals with their own needs and circumstances; courteousness and respect; listening; explaining things; and answering questions.

Providing more flexible service for business, customers and government

Centrelink must continue to develop flexible services, ensuring that we are easy to deal with as an organisation and can respond quickly to new demands. Provision of online services is crucial to keep up with community expectations and make things easier for customers, business and community organisations that interact with us. We also need to be able to respond quickly to crises and emergencies in the community. Most importantly, Centrelink needs to be ready to quickly implement new policies and programs as government priorities change.

A good example from the past year has been our response to the widespread drought affecting so many communities. The Government has demonstrated its faith in Centrelink's capacity to deliver assistance in regional Australia by not only continuing its delivery of Exceptional Circumstances support but also in giving Centrelink primary carriage of the Government's additional drought assistance measures announced in December 2002.

In areas where word of mouth is still the most effective communication method, Centrelink's staff have earned the respect of communities by their willingness to travel long distances and work long hours to talk to rural Australians in affected towns and regions.

Centrelink also responded exceptionally to the tragic events in Bali on Saturday 12 October last year. By the following Tuesday, Centrelink had established a 24-hour hotline for survivors and their families, offering financial support including medical, accommodation and travel costs. We also created family liaison officer roles to help victims and their families cope with the trauma and its effect on their lives.

An exciting new national partnership with the community, Community Connect, will enable information sharing and joint servicing between Centrelink and community/ government agencies. Community Connect is being developed as a shared online product, which will open up access to certain Centrelink tools by community serviceproviders and enable community organisations to place information such as their referral requirements on the database.

As Community Connect grows throughout 2003-04 and beyond, more and more providers will be able to share booking and two-way referral facilities enabling smooth transition for their customers. These facilities will always incorporate permission-based access to customer information to ensure the appropriate security and protection of individual details. Ultimately, Community Connect will go a long way to ensuring that citizens can approach service delivery in a seamless, holistic and comprehensive manner without having to know the correct entry point.

Demonstrating that we provide value for money

The Boston Consulting Group report demonstrated that we have established a good record in delivering value for money and ensuring the Government has confidence that its investment in Centrelink is well spent. We will not, however, be resting on our laurels. Continuous improvement, both in terms of the quality of the outcomes we deliver and the efficiency with which we deliver them, is our highest ongoing priority.

Financial outcomes

Centrelink reported a net deficit of $47.7 million for the 2002-03 financial year. This deficit is less than 2.5 per cent of Centrelink's total annual revenue of $2 billion, and is significantly offset by retained surpluses from prior years of $34.7 million. The majority of this deficit can be attributed to movements in employee entitlements. Actuarial factors, including an upturn in estimated future inflation rates, a reduction in long-term bond rates, Commonwealth wide increases in superannuation contribution rates and increased retention rates for Centrelink staff have all contributed to an estimated increase in future obligations to staff for long service and recreation leave. The net increase across the financial year, after netting out leave taken and leave payouts, was $46.4 million.

Centrelink's ongoing financial position remains sound, with $113.3 million cash available at the end of the financial year, and an average cash balance across the financial year of $123.9 million.

The next 12 months and beyond

In 2003-04 Centrelink will deliver on the four key challenges through implementing Future Directions 2003-06 and the Business Plan 2003-04. This will include

• focusing on protecting the integrity of government outlays through the Business Assurance Framework and the Getting It Right strategy
• continued implementation of Australians Working Together, with an increasing proportion of Centrelink customers becoming subject to voluntary or compulsory participation requirements
• improving the consistency of performance through the identification and adoption of better practice
• expanding the ability to exchange information with third parties such as businesses and educational institutions through the e-Business strategy
• operating as part of the social coalition between government, business and the community through providing opportunities to share knowledge, data, experience and resources, including co-location strategies
• creating effective relationships with service providers to achieve the desired outcomes for customers
• creating a positive image, consistent with government policy objectives, to ensure that all citizens are aware of the services Centrelink provides, and are willing to access them when they need to
• working to actively engage customers and ensure they are aware of their obligations
• improving the consistency of service levels across the network, including improving the satisfaction levels of key customer groups
• continuing to work towards making it easier for customers to interact with Centrelink through the development of self-service options such as Internet access, Short Message Service and voice recognition technologies
• enhancing workforce planning processes with an emphasis on the application of accredited learning principles and the development of programs that provide technical and other skills to deliver business outcomes to nationally recognised standards
• providing better business information for staff and their managers to make informed decisions
• putting in place an effective succession plan that helps manage employee growth and development
• improving the effectiveness and efficiency of the way Centrelink delivers services
• actively managing resources to ensure customers are directed to the most cost-effective channel available
• managing the government's investment in information and technology in order to ensure that the benefits to the Government, community and customers of IT Refresh are realised, and savings achieved.

Thank you

I want to thank our Board members, especially, our Chairman, John Pascoe, whose support was, as always, a valuable source of encouragement and guidance. I also would like to thank our client departments for their continued confidence and new business. Finally, I would like to thank Centrelink staff whose commitment to our customers, their perseverance and ingenuity ensures we continue to be able rise to whatever challenges come our way.