Cost-Benefit Analysis of
Innovative Community
Action Networks Program
South Australian Department for
Education and Child Development
7 May 2012
Contents
Executive Summary .................................................................................................................... i
1
Introduction .................................................................................................................... 5
1.1
2
3
4
5
Structure of this report ..................................................................................................... 5
Context and background ................................................................................................. 6
2.1
2.2
The benefits of education and training .............................................................................. 6
The rationale for government intervention ....................................................................... 8
2.3
Policy context ................................................................................................................... 9
2.4
The ICAN program .......................................................................................................... 11
Cost benefit analysis framework.................................................................................... 16
3.1
The CBA framework ........................................................................................................ 16
3.2
3.3
Step 1 — define the program to be assessed ................................................................... 17
Step 2 — define the base case ........................................................................................ 17
3.4
Step 3 — identify all costs and benefits ........................................................................... 17
3.5
3.6
Step 4 — data considerations.......................................................................................... 18
Step 5 — estimate the value ........................................................................................... 22
Cost benefit estimation ................................................................................................. 25
4.1
Modelling inputs and assumptions .................................................................................. 25
4.2
4.3
4.4
Direct benefit estimation ................................................................................................ 30
Direct cost estimation ..................................................................................................... 30
Net position .................................................................................................................... 31
4.5
4.6
Non-quantifiable benefits ............................................................................................... 32
Sensitivity analysis .......................................................................................................... 38
Future data collection ................................................................................................... 41
5.1
Improving ICAN program data ......................................................................................... 41
5.2
Improving the base case ................................................................................................. 42
References .............................................................................................................................. 43
Limitation of our work............................................................................................................. 47
Glossary
BCR
Benefit Cost Ratio
CBA
Cost Benefit Analysis
COAG
Council of Australian Governments
DAE
Deloitte Access Economics
FLO
Flexible Learning Option
ICAN
Innovative Community Action Networks
NP
National Partnerships
VET
Vocational Education and Training
Executive Summary
The Innovative Community Action Networks (ICAN) program is a major policy intervention
that seeks to address the needs of young South Australians (from Year 6 to 19 years of age)
who have disengaged from school or who are at serious risk of doing so. ICAN was
established to assist these young people to re-engage with learning and successfully return
to school and / or embark on a pathway to further education, training and employment.
The purpose of this study was three-fold:

to establish a sound Cost Benefit Analysis (CBA) methodology for an evaluation of the
ICAN program.

to apply available data to estimate the net benefit of the ICAN program to date.

to generate recommendations for future data collection that validates the CBA.
Methodology for a CBA of ICAN
The CBA methodology proposed in this paper outlines six key steps to estimating the net
impact on welfare in South Australia attributable to ICAN. The method has been designed
with a view to updating current estimates of the net benefits based on future years of
program operation and/or more valid data.
Given the nature and target population of the ICAN program, it is of particular importance
that the quantification of costs and benefits is supported by a qualitative discussion of
intangible benefits. Intangible benefits of the ICAN program pertaining to health, reduced
crime and benefits that flow through to future generations are identified and discussed in
the current study.
Estimates of the net benefit of ICAN
Using currently available data, the CBA presented in this paper suggests that the ICAN
program is of net benefit to South Australia.
This study finds that the investment made over the years 2007-10 will have yielded $4.1
million in direct net present benefits to South Australia to 2016 (equivalent to a benefit to
cost ratio of 1.9). Furthermore, adding the indirect benefits and costs that follow, the total
increase in economic value in South Australia is likely to be in the order of $7.7 million (in
net present terms) over the same period (equivalent to a benefit to cost ratio of 2.2).
This finding is critically dependent upon the assumption that in the absence of the program,
participants would not have completed a Year 12 equivalent year. This assumption has
been validated anecdotally by the Department, based on an understanding of the level of
disadvantage this targeted cohort will otherwise face in participating in formal learning. The
ICAN cohort is either completely disengaged from school or so disengaged from learning
that they are at serious risk of not continuing at school. Guidelines for ICAN state: ‘All
referrals of students for a FLO enrolment assume that all other alternatives to engage the
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student have been exhausted by the school and all key stakeholders, and that all parties
believe that a FLO enrolment is the most appropriate course of action.’1
Other data assumptions employed in the current CBA, however, may serve to
underestimate the net benefit of ICAN. For example, it was not possible to isolate postschooling outcomes for a similarly disadvantaged cohort of Australian students using
currently available data, let alone a comparable cohort of South Australian students.
As such, three key caveats are identified in relation to interpretation of the estimates:

Data limitations – both the control and scenario data that is currently available for this
assessment is limited, and are more likely bias the net benefits downward.
• Limitations in defining the base case — It is difficult to isolate a suitably
comparable group of students to the ICAN participants in currently available
data, in order to construct an accurate base case. ICAN students are
characterised by being disadvantaged on a number of dimensions including
socioeconomic status, health, Aboriginality, disability and cultural and
linguistic diversity. The data used to construct the base case in this study
controls, at best, for a level of socioeconomic disadvantage. It is therefore
likely to overestimate outcomes in the base case and lead to an
underestimate of benefits of the ICAN program.
• Limitations resulting from ICAN program data — Current ICAN data is limited in
its ability to capture the outcomes for students who participate in the
program. For each year of available data, over half the students did not have
a coded destination available. Furthermore, the way in which destination
data is collected, that is, through a third-party source and immediately upon
exit (as a ‘best guess’) is not optimal. It is therefore likely to underestimate
outcomes of ICAN participants.

Timing – the ICAN program is in its inception phase, and as such, has recently
undergone a period of significant expansion. The costs associated with this expansion
are reflected in this CBA. Given the cost per ICAN participant would reasonably be
expected to decrease in years to come, the benefit to cost ratios (BCRs) will inevitably
improve (all other things being equal).

Accounting for intangible benefits – many of the benefits associated with improving
pathways for the most disadvantaged youth among the population cannot be reliably
quantified. These benefits include the following, all of which have been shown to be
related to number of years of schooling: health, life satisfaction, avoidance of the
criminal justice system and intergenerational benefits. To the extent that these benefits
are excluded from the quantitative estimations here, the BCRs themselves are
understated.
Accordingly the BCR estimates should be viewed as preliminary at this stage.
1
Department for Education and Child Development (2012)
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Recommendations for future data collection
The express objective of the ICAN program is to support a targeted group of at-risk young
people in re-engaging with formal learning and pathways towards training, or employment
and having a more meaningful involvement in their community.
Following from this, key inputs and assumptions (used in this CBA) that could be revised in
future work would include (by cohort) the:

Probability of completing Year 12 having engaged in ICAN.

Probability of progressing to further study having engaged in ICAN.

Probability of progressing to employment having engaged in ICAN.

Probability of avoiding particular social costs having engaged in ICAN.
In order to satisfy these data requirements, a small number of questions would need to be
asked of the program participants themselves at a period post-program completion, for
instance 12 months out. The results could be cross-checked against a survey of case
managers, schools and community organisations – referencing similar themes and seeking a
greater understanding of the spillover benefits of the program and the drivers of its
success.
Addressing the suitability of the control group (baseline) data is less straightforward. As a
starting point, a more systematic collection of the risk of disengagement for a student, prior
to commencing the ICAN program, could improve the understanding of the impact the
program has on completion of formal education.
Developing an accurate base case for post-schooling outcomes, however, is more difficult.
The manner by which national and state data is currently collected will inherently bias the
samples toward a more advantaged group that those who participate in ICAN (where the
most disadvantaged will tend to be excluded or drop out of these surveys). Short of a
controlled experiment, there is little that can be done to improve this situation in the
immediate term.
Conclusion
The ICAN program is funded to assist the most disadvantaged and vulnerable young people
of school age in achieving formal education outcomes with the view of facilitating improved
transitions into learning and earning pathways in adulthood. The program has operated for
over six years to date and now expands its reach across the whole of South Australia, and
has also broadened its scope to address the needs of upper primary school children.
In alignment with the program’s objective, the CBA of ICAN presented in this paper finds
that when assuming ICAN participants would otherwise not complete Year 12 or equivalent
studies, the ICAN program has achieved net benefits for the South Australian community.
In presenting a framework for updating this CBA with more valid data, the strongest
learning is that the case exists for continuing to refine the outcomes reporting around ICAN.
In improving data collection, the benefits of the ICAN program might be more reliably
reported and will at the very least provide a useful and robust basis for instituting
evidenced-based improvements to the ICAN program over time.
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This analysis provides a case for continuing to invest in ICAN, whilst refining the outcomes
reporting and potentially continuing to improve the cost-effectiveness of ICAN. Ultimately,
where the benefits can be consistently demonstrated to reasonably exceed the costs, a
strong case exists for the broader application of the ICAN model in engaging at-risk youth.
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Cost Benefit Analysis of ICAN
1 Introduction
The need to equip young Australians with the capacity to pursue meaningful and
productive engagement in society is of increasing importance; in line with pressing
economic and social imperatives. Recognition of this underpins a number of COAG National
Agreements, providing a framework for building the skills necessary in a modern and
evolving economy and society.
The Innovative Community Action Networks (ICAN) program provides a state-based
response to prevailing skill shortages and social disengagement, by assisting disengaged (or
seriously at-risk of disengaging) school-aged learners across South Australia to access the
benefits of case management and tailored learning. ICAN tailors accredited training to the
specific needs of disadvantaged learners – who may face a range of acute difficulties in
successfully engaging or re-engaging in schooling – with the ultimate aim of Year 12 or
equivalent attainment and/or a successful transition to further education or work.
In light of the investment in ICAN and the proposed benefits of it as a model of reengaging
at-risk youth, Deloitte Access Economics (DAE) has been engaged to undertake a
preliminary cost benefit analysis (CBA) of ICAN on behalf of the Department for Education
and Child Development (the Department). Specifically, this project focuses on the ‘Flexible
Learning Option’ (FLO) enrolment component of the ICAN program from 2007-2010, and
does not consider other supplementary elements of the ICAN program (such as the recently
introduced ‘exceptional circumstances funding’) as in scope for review.
Specifically, the objectives of the project are to:

establish a sound CBA methodology for an evaluation of the benefits of the ICAN
program against its costs

apply currently available data to estimate the net benefit of the ICAN program to date
 generate recommendations for future data collection that validate the CBA.
The CBA proceeds from the perspective of the South Australian community and is informed
by literature and data provided by the Department and other key sources. The outcomes of
this piece of work will feed into the concurrent program evaluation. The analysis has been
prepared in accordance with South Australian Department of Treasury and Finance
guidelines.
1.1 Structure of this report
In light of the objectives of this study, the report proceeds as follows:

Chapter 2 outlines the context and background to ICAN.

Chapter 3 sets out the cost benefit analysis framework to be applied.

Chapter 4 details estimates of the costs and benefits of ICAN.

Chapter 5 provides some early conclusions and recommendations for further study.
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Cost Benefit Analysis of ICAN
2 Context and background
Participation in formal education is regarded as a key factor in the formal development of
an individual’s skills and knowledge. Indeed, young people who complete school have a
greater likelihood of continuing further study, as well as entering into the workforce.
Formal training, therefore, contributes to the development of a skilled workforce, and
consequently, to ongoing economic development, improved living standards and enhanced
social inclusion.2
Over 20 per cent of young people, however, leave school before graduation, potentially
compromising their ability to realise the benefits of school completion.3 Disengagement
from school and early leaving tends to be concentrated among particular groups of young
people, including students from indigenous backgrounds, those with integration needs, low
achievers, those from low-socioeconomic status backgrounds, young people in families
under stress and young people living in remote locations.4
As such, this chapter discusses the benefits of education and training, the rationale for
government provision of programs such as ICAN, the policy context in which ICAN operates
and contributes, as well as the nature of the program and how it is funded.
2.1 The benefits of education and training
The benefits of engaging in and completing formal education, be it Year 12 or alternative
accredited training, are well documented in Australian and international literature.
Studies find that young people who do not complete school or gain equivalent education
and training are more likely to become unemployed, stay unemployed for extended periods
of time, earn lower wages and accumulate a lower level of wealth across the span of their
lives.5 Chart 2.1 illustrates, by school completion status, the proportion of people in 2010
who were employed. Consistently, across all age groups, those who completed year 12 (or
its equivalent) exhibited higher rates of employment than those who did not.
2 ABS (2001)
3
ABS (2011)
4
Australian Government (2011); Department of Education and Early Childhood Development (2008)
5
Rumberger & Lamb (2003); OECD (2001); Levin (2010)
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Cost Benefit Analysis of ICAN
Chart 2.1 Proportion of people who were employed by Year 12 attainment and age –
2010 (Australia)
Source: ABS (2011)
Similarly, comparing the weekly income of those who are in the workforce (aged 20-64),
Chart 2.2 shows that those who attained year 12 earn, on average, a higher level of income.
The difference is most stark at the extremes. Of those in the highest income quintile, 70 per
cent had completed schooling, while only 30 per cent had not.
Chart 2.2: Personal Gross Weekly Income from all Sources for 20-64 year olds by year 12
attainment – 2009 (Australia)
Source: ABS (2011)
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Cost Benefit Analysis of ICAN
Research also shows that not completing school is often correlated with poorer physical
and mental health, higher rates of crime, and reduced levels of civic activity and
participation, however, it is harder to determine causation from this correlation.6 Not
completing school will typically be associated with less social inclusion and cohesion within
a community. Consider, for example, Chart 2.3 which illustrates health outcomes by school
completion. Better health appears to be disproportionately distributed amongst those who
completed year 12.
Chart 2.3: Level of self-assessed health status by year 12 attainment for 20-24 year olds –
2009 (Australia)
Source: ABS (2011)
In addition to these costs incurred directly by individuals, who do not complete schooling,
there are also spillover costs to society, such as increased social service costs, health costs
and justice system costs. 7
2.2 The rationale for government intervention
At a high level, the primary argument for government intervention in the education of
young people is that educational attainment generates benefits for both the individual and
society.
Given young people are not fully mentally developed at the point that they make a decision
about whether or not to continue with school, this can lead to myopic behaviour.
Furthermore, a principle-agent problem can exist where financially constrained parents
make decisions on the children’s behalf. As such, individual decision makers will not always
take into account the extent to which an education benefits society more broadly, and left
6
Levin (2010); Owens (2004); Campolieti et al (2009)
7
Owens (2004)
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Cost Benefit Analysis of ICAN
to their own devices, will tend to under-invest in education relative to what is socially
optimal.
While at face value the existence of positive spillovers is a rationale for government to
invest in public education and provide the necessary incentives for participation and
completion, it should also be the case that the costs are outweighed by the benefits and to
a greater degree than alternative policies/investments.
Beyond this basic ‘market-failure’ argument, the existence of equity objectives is further
motivation for intervention in the provision of education. Public policy should reflect the
values of society, that is, the way in which the public would choose to have their resources
allocated.
As a society that, through a democratic process, shows that it values the broader inclusion
of disadvantaged cohorts in education and ultimately society – recognising the additional
barriers faced by these individuals in participating in education and the benefits that
education can generate for both individuals and their community – there are grounds for
sustained public investment to be concentrated in this area. Indeed there is a long history
of widespread electoral support in Australia for universal health care and education – the
challenge is to identify and assess the most cost effective and economically efficient ways
to deliver on the equity objectives held by our society.
For these reasons, school completion and, more broadly, enhanced outcomes in society for
disengaged and disadvantaged young people are regarded as matters of significant
importance in the Australian policy environment, emphasised in the policy context below.
2.3 Policy context
Inter-governmental policy
The Council of Australian Governments (COAG) policy agenda includes a myriad of
agreements that recognise the importance of improving educational outcomes for
disadvantaged young people, including higher levels of education and/or training
attainment. The main COAG agreements are overviewed in the box below.
Box 2.1: COAG policy agenda
National Education Agreement
Introduced in 2009, the primary aim of this agreement is to ensure all Australian school students
obtain the knowledge and skills to participate effectively in employment and society more broadly.
A core objective under the NEA is to lift the Year 12 or equivalent attainment rate for 20-24 year
olds to 90 per cent by 2015. Several National Partnerships (NPs) associated with the NEA also focus
on improving educational outcomes for disengaged and/or disadvantaged young people, such as:

Smarter Schools NP for Low Socio-economic Status School Communities – this NP aims to
improve student engagement and educational outcomes in participating low SES schools, in
turn helping to address entrenched disadvantage. A key area of reform facilitated by the NP is
‘tailored learning opportunities for students’. Funding under this NP has been allocated
towards the ICAN program.

Smarter Schools NP for Literacy and Numeracy – this NP provides additional funds to assist
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students struggling with literacy and numeracy, with a focus on high quality teaching, strong
school leadership and whole school approaches.
National Partnership On Youth Attainment and Transitions
Also introduced in 2009, this agreement is aimed at increasing the participation of young people in
education and training and helping them make a successful transition from school to further
education, training or full-time employment. Key performance indicators include an increase in the
enrolment of students in Years 11 and 12, the number of 15-19 year olds without a Year 12
certificate who are enrolled in Certificate II or higher training and the proportion of young people
aged 15-24 participating in post-school education, training or employment six months after leaving
school. Individualised support for young people at risk is emphasised under this agreement,
including through the Youth Connections program.
Compact with Young Australians
Delivered under the NP on Youth Attainment and Transitions, this agreement is designed to ensure
young people are either ‘learning or earning’. It requires that young people remain in school until
Year 10 and then in full-time education, training or employment (or a combination of these) until
age 17. Those aged 15 to 24 years are also entitled to an education or training place that focuses
on completing Year 12 or a higher qualification.
In April 2012, COAG agreed to implement a Skills Reform package – ‘Skills for all
Australians’, which will result in significant reforms to the national vocational education and
training (VET) system. This package notes that improvements in training outcomes for
disadvantaged people are required to lift their workforce participation and contribute to
productivity growth.8
The Melbourne Declaration on Educational Goals for Young Australians also specifies two
national goals for schooling that emphasise the significance of ensuring all young people
are engaged in learning, including the most disadvantaged:

Australian schooling promotes equity and excellence; and

all young Australians become successful learners, confident and creative individuals and
active and informed citizens.
South Australian Government policy
The Social Inclusion Initiative was established by the State Government in 2002, with a
focus on increasing opportunities for individuals – especially the disadvantaged – to
participate fully in community life. Under this Initiative, ‘joined-up responses’ – policy
responses built around cross-departmental cooperation and community partnerships,
emphasising prevention and early intervention – are regarded as key to successful policy.9
School retention was a key focus under the Social Inclusion Initiative. In 2004, Making the
Connections, a strategy to improve school retention rates, was introduced. The strategy
explicitly recognises the importance of providing learning and employment pathways for
young people who are disengaged, or at risk of disengaging, from school in order to
8
Commonwealth of Australia (2012)
9
Government of South Australia (2009a)
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Cost Benefit Analysis of ICAN
improve individual and community wellbeing and prosperity. The ICAN program evolved
from this broader strategy.
At a Departmental level, three key policy objectives outlined in the Strategic Plan for Public
Education and Care 2012-16 are: (1) every child achieves their potential; (2) excellence in
education and care; and (3) connect with communities. ICAN is a key element in achieving
these objectives. It comprises flexible learning, case management and community
partnerships to help re-engage young people at risk.
The ICAN program, geared towards improving outcomes for young people at the ‘pointy
end’ of education delivery, is outlined in further detail below.
Federal Government policy
The recently released Final Report of the Review of Funding for Schooling (the ‘Gonski
Review’) – commissioned by the Federal Government – provides some analysis and findings
in relation to disengaged students. For example, it found that:

concentration of disadvantaged students within schools – particularly low SES and
Indigenous students – has a significant impact on educational outcomes and therefore
higher loadings should be provided where disadvantage is more concentrated

all schools should have welfare policies that seek to find the most appropriate learning
environment for students who are unable to remain within a school; and

investment in integrated strategies that are responsive to local circumstances and need
can be effective in improving outcomes for disadvantaged students, including through
engagement with the broader community.
It also highlights international research findings that indicate: (1) returns to educational
investments are higher in early, primary and secondary education than later years of
education, due to their effects on facilitating later learning and participation in the
workforce; and (2) the returns to educational investments are particularly high for children
from disadvantaged backgrounds, whose home environments may not provide them with
the foundation skills necessary to prosper at later educational stages.10
2.4 The ICAN program
In line with this broader policy context, ICAN was originally established in selected regions
of South Australia in 2005. The program has gradually expanded across the State and in the
last two years has also expanded to cater for the needs of children of upper primary school
age. Today, the program is available to all government Primary and Secondary schools,
across South Australia.
ICAN is operated through local community networks. Each ICAN local area has a separate
management committee that is staffed with members of local community organisations,
businesses, schools and other government agencies. This group collaborates to develop
local solutions to meet the particular needs of identified disengaged young people in their
region. The committee also enables locally-based stakeholders to provide feedback to State
Government agencies around student engagement policies and community needs.
10
DEEWR (2011)
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Cost Benefit Analysis of ICAN
The Department maintains a lead role in the ICAN program operation and is charged with
appointing regional staff to work with local community networks and other Departmental
staff and schools.
The ICAN program was reviewed in 2006 by Atelier. The review found that at that point,
ICAN had had made ‘significant inroads’ into the ‘provision and extensions of the learning
space for around two and a half thousand disengaged young people.11
2.4.1
Flexible Learning Option enrolment
Government schools maintain responsibility for the enrolment of identified disengaged
young people in ICAN schooling pathways, through an arrangement termed a flexible
learning option (FLO), more commonly referred to as a ‘FLO enrolment’. The FLO
component of the ICAN program represents the greatest share of the investment and is the
focus of the current CBA.
Each identified young person has a paid, qualified, case manager (who is not a teacher) to
assist with relevant life issues. Case managers support the young person to establish
learning goals through a Flexible Learning and Transition Plan. Case managers and school
staff collaborate in relation to planning learning programs.
The long term objective of the program is for each person to complete Year 12 or an
equivalent year of formal education, and/or to make a successful transition to further
education, training or employment.
All referrals of students for a FLO enrolment assume that all other alternatives to engage
the student have been exhausted by the school and all key stakeholders, and that all parties
believe that FLO enrolment is the most appropriate course of action.
An individual targeted for a FLO enrolment may still be attending school, although often
erratically, and they are likely to be at severe risk of complete disengagement. Others will
have already completely disengaged from any form of learning. Further still, others may
have been in custodial care in a juvenile justice setting.
2.4.2
Characteristics of the targeted population
In the first instance, the ICAN program tends to attract young people from a
socioeconomically disadvantaged background. Chart 2.4 illustrates this point,
demonstrating that the majority of ICAN participants fall within a range of economic
disadvantage that is lower than the general population.
Indeed the level and dispersion of socioeconomic disadvantage amongst the ICAN
participants, and relative to the general population, is mapped below using the Index of
Relative Disadvantage. The red line in Chart 2.4 below illustrates the median of the ICAN
population which falls approximately within the third-decile of the general population
distribution of scores.
11
Atelier (2006)
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Cost Benefit Analysis of ICAN
Chart 2.4: Index of Relative Disadvantage – General population and ICAN population
General population
ICAN population
Source: ABS (2008) ‘How to Interpret SEIFA Score Distributions’; ICAN participant data (2008)
However, ICAN participants are a group of young people with significant needs, perhaps the
most disadvantaged group of young people. This particular group of young people are not
just low SES cohort, but rather, have multiple and significant personal and familial
complexities such as homelessness, juvenile justice, serious mental health issues and
substance misuse issues.
Figure 2.1 presents survey outcomes for the 30, ICAN participants at an Adelaide northern
suburbs (low SES) school. The figure illustrates the complexity and depth of disadvantage
faced by ICAN participants.
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Cost Benefit Analysis of ICAN
Figure 2.1: Sample of ICAN participants – disadvantages faced
Student
Indigenous
Guardianship of the Minister
Extreme poverty
Isolation / rurality
Transience
Home conflict
Health
Anti-social behaviour
Bullying
Homelessness
Substance abuse
Juvenile justice
Learning difficulty
Truancy
Suspension /exclusion
Number of disadvantages
1
2
3
4
1
5
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
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1
7
1
1
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8
1
1
1
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1
1 1
1 1
1
1
5 11
1
6
1
1
1
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1
1 1
1
1
5 11
7
8
1
1
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1
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1
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1
6
1
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7
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
1
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1 1 1 1 1 1
1 1 1
1 1 1 1 1
1 1
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1 1
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1 1 1 1 1
1 1 1
1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1
1 1 1
1 1 1 1
8 9 5 10 9 4 2 10 5 5 7 7 7 10 7 7 4 5 5 4 7 3
Figure 2.2 provides a representation of the risk of disengaging from school. The Department
has noted that the majority of ICAN participants would be classified in the top tier of the
pyramid – that is, characterised by significant or potentially significant issues of
disengagement.
Figure 2.2: A profile of student engagement in school
Source: ICAN Expansion Project Plan, June 2010 (Department of Education and
Children’s Services)
Table 2.1 summarises the spectrum of student risk profile that is addressed by FLO
enrolments and the engagement objective that is associated with each level of risk. The
common factor across all levels of ‘student profile risk’ is an elevated probability of early
school leaving, and this probability grows across the spectrum of student profile risk.
Currently, there is no data available to determine the probability of early school leaving
associated with each risk level.
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Table 2.1: Targeted students of FLO enrolments – student risk profile
Early intervention
Keeping on track
Keeping
connected
Re-engagement
Definition of
target
cohort
At some risk of
early school
leaving
Students still able
to maintain a link
with school-based
learning
Student with
longer term
habitual
attendance issues,
requiring greater
support in social
and living skills
Student completely
disengaged: school
refusal, chronic
truancy, significant
barriers in student
health, wellbeing—
may have links with
juvenile justice
issues
Engagement
objectives
To fully engage
ideally into the full
range of learning
options available
to all students at
school site
To increase
attendance,
engagement and
successful
achievement in
learning
To achieve
successful and
positive
engagement in
community and
learning
To engage in
learning for a
positive and
successful
engagement in
community with a
realistic
learning/work plan
for future
Source: ICAN Guidelines (2011)
Funding of the ICAN Program
2.4.3
ICAN is funded through a combination of State and Federal Government funds. In recent
years, ICAN has expanded across South Australia through funding provided under the
Smarter Schools Communities Making a Difference National Partnership (the NP).
In 2011, the Australian Government provided $4.9 million in funding towards the ICAN
program through the NP, while the South Australian Government provided $0.8 million in
additional funds. Table 2.2 provides the breakdown of funding from 2006-2011.
Table 2.2: State and Federal funding for ICAN 2006–07 to 2010–11
Funding source
2007
2008
2009
2010
2011
State
$1.8m
$1.3m
$1.2m
$1.1m
$0.8m
0
0
$2.3m
$4.0m
$4.9m
$1.8m
$1.3m
$3.5m
$5.2m
$5.7m
Federal
Total
Source: ICAN cost data (2012)
In addition to the funding identified in Table 2.2 above, the enrolment of eligible ICAN
students generates per capita funding that is equivalent to the per-capita funding rates for
general school enrolments. That is, the funding generated from State finances is equivalent
on a per-capita basis, whether or not the young person is enrolled as an ICAN student or
not.
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3 Cost benefit analysis framework
Cost Benefit Analysis (CBA) is a systematic method for comparing the socioeconomic
benefits and costs of a program, policy or investment against a baseline ‘do nothing’
scenario in which the activity does not take place. As such, CBA is a primary method for
examining whether welfare has increased as a result of the activity.
As with any quantitative method, the accuracy of a CBA is a function of the quality of its
inputs and assumptions. Indeed it is focused on analysing costs and benefits that can be
monetised and is, therefore, not able to account for all of the intangible aspects of an
activity. For this reason, it is important that any CBA also includes a qualitative discussion of
benefits and costs which could not be readily monetised and included in the quantitative
analysis, to provide a more complete understanding of the contribution.
Accordingly, this chapter sets out a recommended methodology for conducting a CBA of
the ICAN program, and highlights the benefits and costs that can and cannot be taken into
account at this point in time. The CBA framework is then applied using the currently
available destination, control and expenditure data, in Chapter 4.
3.1 The CBA framework
The CBA framework below outlines the steps to be taken to defining the ‘incremental’
impacts of the ICAN program. That is, it’s a method used to define the net benefit to South
Australia that can be attributed directly to the existence of the ICAN program. The CBA
framework applied in this study involves five key steps, outlined in Figure 3.1.
Figure 3.1: Analytical framework

Step 1 – to provide context and direction for the CBA, the policy aims, program
objectives and rationale of the ICAN program are defined.

Step 2 – a base case scenario is developed that best describes the counterfactual
world that would likely exist if ICAN had not been instituted. The base case is used as
the reference point from which to measure the changes in welfare that are
attributable to the investment in ICAN, referred to as the incremental impacts.

Step 3 – the benefits and costs of the ICAN program are defined with reference to
the base case and in conceptual terms. This intermediate step is important as it
defines the full set of benefits and costs that are expected to result from the
operation of the program, regardless of whether or not they can be valued.

Step 4 – the extent to which identified costs and benefits can be estimated in
monetary terms is determined. Where data is poor or does not exist, the CBA will
only reflect a subset of the incremental costs and benefits defined at Step 3.
Conversely, where data is strong and abundant, the CBA will more accurately reflect
the full net cost or benefit of the program.
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Cost Benefit Analysis of ICAN

Step 5 – the estimated costs are subtracted from the estimated benefits to reveal the
net position of the program. As noted above, the extent to which the figure
calculated is reflective of the true net value of the program will be determined by the
quality of the available data, and how readily the costs and benefits lend themselves
to quantification.
3.2 Step 1 — define the program to be assessed
The express objective of the ICAN program is to support a targeted group of at-risk young
people in re-engaging with formal learning and pathways towards training, or employment
and having a more meaningful involvement in their community.
The term ‘formal learning’, in this context, refers to either the completion of Year 12 or
equivalent, or entrance into an accredited training program. The extent to which ICAN has
been successful in achieving its objectives will be reflected in the realisation of benefits that
flow from formal learning and social inclusion, for program participants and the
communities within which they reside.
3.3 Step 2 — define the base case
The base case is a hypothetical construct of those costs and benefits that would be realised,
or indeed not realised, if the ICAN program was not in existence. By its very nature, the
development of a ‘base case’ is a best-guess of the circumstances of a counterfactual world.
The base case is ideally developed by analysing learning and earning outcomes for a
comparable cohort of young people, over the same timeframe as the young people who are
enrolled in ICAN. The accuracy of this method in approximating the likely outcomes for
ICAN participants had they never enrolled in ICAN depends upon how similar the youth in
the base case group are to the youth in the ICAN participant group.
The base case group should therefore be selected such that it matches as many
demographic characteristics of ICAN participants as practicable. As noted in section 2.4.2,
primarily, ICAN targets young people who are at risk of disengaging from formal schooling.
3.4 Step 3 — identify all costs and benefits
Step 1
Define the program to
be assessed
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Step 2
Define the
base-case
Step 3
Identify all
costs and
benefits
Step 4
Consider
data
availability
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Step 5
Estimate
the value
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Cost Benefit Analysis of ICAN
The broad categories of benefits that would be expected from the operation of the ICAN
program include:

Improved educational attainment (with implications for productivity and social
inclusion/civic participation – that is, the benefits of a more knowledgeable society).

Increased likelihood of participation in the labour force (through improved
employability and improved productivity).

Improved human capital (through improved knowledge, skills and health and
wellbeing, with implications for productivity and social costs avoided, such as
healthcare and crime).

Increased social inclusion and cohesion – as the culmination of the above.
It is important to note however that these are not necessarily discrete and additive benefit
streams, as reflected for instance by the overlapping productivity affect.
On the other side of the cost-benefit ledger are the costs. The CBA should consider all the
costs incurred by society (South Australia) that are necessary to deliver ICAN. At the
simplest level, these costs will include funding for staff, administration, infrastructure and
other operational costs as part of delivering the program. Beyond these basic costs exists
other costs that are often more difficult to capture, such as additional leveraged dollars and
in-kind resources – including volunteers (labour) and facilities (capital) – and the cost of
raising tax dollars to fund the program.
In theory the costs would also include any negative externalities attributable to ICAN,
although at this point the existence of such costs is not immediately obvious.12
3.5 Step 4 — data considerations
Step 1
Define the program to
be assessed
Step 2
Define the
base-case
Step 3
Identify all
costs and
benefits
Step 4
Consider
data
availability
Step 5
Estimate
the value
Three key sets of data are required to undertake the study:
1.
ICAN outcomes data – learning/earning destination data by demographic
circumstances, for those young South Australians who participate in ICAN
2.
ICAN cost data – ICAN program data capturing financial outlays by region, time
period and student cohort.
3.
Baseline (control) data – capturing the outcomes of young people who have not
participated in ICAN but are matched on demographic characteristics and timing to
the ICAN participants.
Other relevant data considerations include those which inform assumptions of average
levels of payoff – that is, average expected wage and potential costs associated with
unemployment. The current study utilises data from the Australian Bureau of Statistics
(ABS) to inform wage assumptions.
12
The term ‘externalities’ is a positive or negative ‘spill over’ of a transaction or an investment.
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3.5.1
ICAN outcomes data
The quantitative analysis requires the following information regarding outcomes for ICAN
participants (by cohort):

the probability of completing Year 12 having engaged in ICAN.

the probability of progressing to further study having engaged in ICAN.

the probability of progressing to employment having engaged in ICAN.
Currently, ICAN outcome data is collected at the point of exit and is based predominantly
on third-party reports of intended destination. Ideally, this data would be collected at
various lagged periods following program exit – thereby making it destination data –
allowing the researcher to validate the progress of young people once they leave ICAN.
3.5.2
ICAN cost data
The cost data required to complete a CBA of the ICAN program is a registry of those costs
incurred by society on behalf of ICAN participants, by virtue of the fact that the program
exists. This data has been largely captured by the Department and is sufficiently valid for
this exercise, the exception being those leveraged dollars and in-kinds which are additional
and not widely reported.
This means that funds that would otherwise be generated, for example, irrespective of the
participation of students in the ICAN program, are not to be counted as costs of the ICAN
program. As such the FLO funding component, as simply re-directed schools funding that
would accrue in both the baseline and the ICAN scenario – at least for the first year of
involvement in ICAN13 – is therefore not included as a direct cost of ICAN.
3.5.3
Baseline (control) data
As described under the subheading of ‘ICAN outcomes data’ above, the baseline data must
define outcomes for a comparable cohort that does not partake in the ICAN program:

the probability of completing Year 12 having not engaged in ICAN.

the probability of progressing to further study having not engaged in ICAN.

The probability of progressing to employment having not engaged in ICAN.
However, there are some difficulties in locating an appropriate baseline cohort for a
program of this nature. Indeed the students who participate in ICAN are characterised by
an elevated level of risk of disengagement from schooling over that observed across the
general population.
Ideally, baseline data would report schooling and post-schooling outcomes for South
Australians who are of comparable characteristics to ICAN participants. Such a data source
was not identified through a survey of currently available data.
13
Due to data limitations and some uncertainty around the counterfactual world the inclusion of FLO enrolment
funding for the second or further years of an engagement under ICAN is not included here, and might therefore
bias the net benefits upward to a degree.
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In lieu of such data, other data options need to be considered. One option is to use national
estimates of these probabilities.
The Australian Bureau of Statistics (ABS) provides national estimates of the probability of
early school leaving (28%) and post-schooling outcomes for both early school leavers and
those who complete Year 12 or equivalent.14 These statistics, however, are not reported
with reference to the characteristics of the survey participants. It is not possible to isolate,
for example, the school completion rate for young people from a low socioeconomic
background. Therefore, it is likely that the rate of school completion and subsequent
outcomes will be an overestimate of the true base case scenario for ICAN participants.
The Longitudinal Survey of Australian Youth (LSAY) also presents a national estimate of
school completion rates and subsequent schooling outcomes. LSAY tracks young people as
they move from school into further study, work and other destinations. Survey participants
enter the study when they are 15 years old. Individuals are then contacted once a year for
10 years. Survey ‘waves’ began in 1995, 1998, 2003 and, more recently, 2009. The 2006
wave is considered in the current study given the proximity to the first year of this study of
ICAN – 2007.
LSAY provides a basis for estimating the school completion rate amongst the lowest quartile
of socioeconomic disadvantage across Australia. Even with this level of detail, however, this
estimate is likely to overestimate the probability that an ICAN participant will complete
year 12 in the base case. This, in part, is because the lowest socioeconomic participants in
LSAY are less likely to continue in the study year after year and provide the relevant
information about year 12 completion or non-completion.
ICAN participants are not only characterised by a background of socioeconomic
disadvantage, but are also identified by the program as young people who are already
facing an elevated level of risk of disengagement. This risk may be in part, but not
completely, captured by any measure of socioeconomic disadvantage.
For this reason, it was considered that the assumption that most, if not all, ICAN
participants would not complete a year 12 equivalent year if they had not entered into
the ICAN program was, in fact, more realistic than employing the LSAY derived estimate
of school completion.
Estimates of post-schooling outcomes reported in LSAY will likely face the same bias,
however, the possibility of overestimation is compounded further by the way in which this
data is collected compared with the way it is collected by ICAN. Where ICAN estimates post
schooling outcomes upon exiting the program and through a third-party, LSAY collects post
schooling outcomes on a time lag and directly from the young person themselves. Analysis
of the LSAY data suggested that these data difference may make the two data sources
incomparable for both year 12 completion rates and post-schooling outcomes.
Other options for establishing a base case may be to consider the outcomes of young
people in other states within Australia that do not operate the ICAN program. Chart 3.1
below, which maps school completion rates across Australia in 2001 (i.e. before the
14
ABS (2011). Note: Although this publication is annual, the focus of the survey differs from year to year, and as
such only the 2009 edition published detail that was relevant to this study.
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Cost Benefit Analysis of ICAN
introduction of ICAN), suggests that either Western Australia or Queensland may be a
comparable states from which to draw data.
Chart 3.1: Proportion of 24 year olds who had completed year 12 – by state
Source: ABS (2011)
Again the viability of this method is limited by the availability of data for other comparable
states. A scan of available sources found that there was data on immediate post schooling
outcomes available for both early school leavers and Year 12 (or equivalent) completers, for
young people in Queensland.
The data is collected as part of the Next Step and Early School Leavers surveys that are
conducted state-wide by the Queensland Government. Both surveys report initial study and
employment destinations for young people after leaving school. Both surveys also provide
this data by the socioeconomic background of survey participants.
However, once again the inability to differentiate the most disengaged of the early school
leavers, that is, those young people who are likely to be most comparable to ICAN
participants, makes it likely that the data will overestimate outcomes in the base case, i.e.
underestimate benefits for the ICAN program.
Nonetheless, short of any other source, and taking into account the characteristics of the
students and the data collection methodology currently employed by ICAN, a combination
of data from the Queensland Next Steps and Early School Leavers surveys was considered
the best approach to constructing a base case for post schooling outcomes. The specifics
of the assumptions used are provided in Chapter 4.
These assumptions are subject to sensitivity analysis, to determine the level to which
outcomes of the CBA are sensitive to the assumptions that underlie them.
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Cost Benefit Analysis of ICAN
3.6 Step 5 — estimate the value
Step 1
Define the program to
be assessed
Step 2
Define the
base-case
Step 3
Identify all
costs and
benefits
Step 4
Consider
data
availability
Step 5
Estimate
the value
The objective of this final step is to extend the understanding of the success of ICAN in
tangible economic and social terms. This is supplemented by a qualitative discussion of
those credible economic and social parameters that could not be readily quantified.
The modelling of the net benefits of the ICAN program is conducted in a purpose-built
Excel-based conditional probability model. The conditional probability model defines and
values (in simple terms) the alternative pathways a disadvantaged young person in South
Australia might pursue after leaving school (refer section 4.1).
For example, the model allows for the calculation of the difference in expected earnings for
a young person who completes Year 12 equivalent studies versus a young person who does
not. In a similar fashion the model parameterises the probabilities of particular social costs
being incurred conditional upon completing Year 12 equivalent studies.15 Figure 3.1
provides a graphical representation of the conditional probability model constructed.
From this it can be seen that for each cohort considered there are two primary pathways –
one with ICAN, one without ICAN. The probability of completing Year 12 (pathways 1, 2, 3
and 4) or equivalent (pathways 5 and 6) and then progressing to education and work is
elevated under ICAN.
ICAN is therefore the condition that affects the probabilities in the first instance. Applying
the difference in these probabilities to the number of ICAN participants gives the estimate
of the incremental number of individuals who have benefited from improved learning and
earning pathways under ICAN, compared to what they would otherwise face. The ‘payoffs’,
coloured blue in Figure 3.1, are the expected values of pursuing any given pathway. For
some, the payoff is positive, represented as an average wage, and for others, the payoff nil
(and, if appropriate figures can be sourced, negative), represented as a ‘social cost’16.
The model assumes that in simple terms the highest returns will accrue to those who
complete Year 12 and then pursue further training. This assumption is supported by ABS
data which suggests those who complete Year 12 are more likely to then complete
Certificate III or IV level education or higher.17 The second highest returns accrue to those
who complete Year 12 or equivalent and then enter the workforce. The lowest wage in the
model is allocated to those who do not complete Year 12 or equivalent level education.
15
Benchmark dollar figures exist for these costs at some level. To the degree they can be reliably applied they
are incorporated in the quantification, or at the very least incorporated on a unit cost basis in the qualitative
discussion (where the number of ‘units’ avoided cannot be reliably estimated).
16
Social benefits are difficult to reliably quantify and are to some degree implicit in the earnings gains, and are
therefore not separately identified in the modelling.
17
ABS (2010) ‘Are young people learning or earning’, accessed online (23.03.2012):
http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/4102.0Main+Features40Mar+2010,
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Cost Benefit Analysis of ICAN
Figure 3.1: Conditional probability model framework
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Cost Benefit Analysis of ICAN
The benefits are reported in net present terms over different reference periods18 – in the
case of this study 5 years, 10 years and 40 years – where the level of uncertainty attached
to each of the expected values increases with the horizon period.
Offsetting these returns to the community in the model are the ICAN program costs, and
any other costs to society that are applicable and can be readily measured (see section 4.1).
As such this largely reflects the cost of case managers and tailored learning (as a pooled
average cost per learner), and in the model is applied entirely in a single year despite
potentially accruing over 2 or more years (for those who remain in ICAN beyond 12
months19). On top of this the economic efficiency loss from raising tax revenue to fund the
program, which was estimated as part of the Henry Review to be in the order of 24 cents
per dollar of taxation raised (across the tax base). Other costs accounted for are those
associated with further training, as appropriate.
What is excluded from the costs are those leveraged funds and in-kinds that are also
required to ensure the observed/claimed outcome, on the basis that these are neither
widely nor consistently reported.
The outputs from the modelling are therefore probability-weighted net benefits
(expected values) and benefit-to-cost ratios.
18
A 3.5% real discount rate is applied
19
Variation in the length of time individuals are engaged in ICAN and the cost of delivering the program from
year to year – independent of the number of participants – led to the averaging of the total cost of ICAN from
2007 to 2010 in an annualised per person figure.
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Cost Benefit Analysis of ICAN
4 Cost benefit estimation
This section of the report applies the framework described in Chapter 3, utilising the
currently available Department data, to estimate the net benefit of ICAN over 5 year, 10
year and 40 year settings.
4.1 Modelling inputs and assumptions
4.1.1
Baseline scenario
The base-case utilised in this study is underwritten by the assumption that no ICAN
participant would complete year 12 if they had not entered into the ICAN program. This
assumption was defined following the consideration of a variety of alternative data
approaches, all of which were deemed to significantly overestimate completion rates for
the target population of ICAN. The assumption is supported by the Department’s
qualitative understanding of the ICAN cohort. Recommendations for improving the
quantitative basis of this assumption are made in Chapter 5.
Post-school outcomes in the baseline were determined using the Queensland Government
Surveys – Next Step and Early School Leavers. Both surveys report outcomes for school
leavers, immediately after they leave school. Outcomes are broken down by socioeconomic
status. Data for young people in the lowest quartile of socioeconomic status was selected
for use in this study.
Outcomes following higher education were determined using the ABS Survey of Income and
Housing (2007-08). These probabilities were held constant across the base case and ICAN
participant pathways.
Table 4.1 outlines the probabilities applied in defining the baseline pathways, where the
pathway numbers reference the numbers allocated in Figure 3.1. It was assumed that once
in (or out) of the labour market, the baseline individuals would face the same payoffs as
their ICAN counterparts – namely the same wage or social cost (see Table 4.3).
Table 4.1: Baseline probabilities (comparison group)
Path #
Pathway description
%
Source
% Complete Year 12
0%
DAE
% In training (assumed a Certificate III/IV)
52%
Queensland Government (2011)
Next Steps Survey
9
% Employed, given completed Certificate
III/IV ^
76%
ABS Survey of Income and Housing
(2007-08)
10
% Unemployed, given completed Certificate
III/IV ^
24%
ABS Survey of Income and Housing
(2007-08)
11
% Employed, given completed Year 12 only
22%
Queensland Government (2011)
Next Steps Survey
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Cost Benefit Analysis of ICAN
Path #
Pathway description
%
Source
% Unemployed, given completed Year 12
only ^
26%
Queensland Government (2011)
Next Steps Survey
% Do not complete Year 12
100%
DAE
% In training (assumed a Certificate I/II)
35%
Queensland Government (2010)
Early School Leavers Survey
13
% Employed, given completed Certificate I/II
only
63%
ABS Survey of Income and Housing
(2007-08)
14
% Unemployed, given completed Certificate
I/II only
37%
ABS Survey of Income and Housing
(2007-08)
15
% Employed, given no Year 12 or equivalent
20%
Queensland Government (2010)
Early School Leavers Survey
16
% Unemployed, given no Year 12 or
equivalent
45%
Queensland Government (2010)
Early School Leavers Survey
12
^ Note, in the primary model where year 12 completion is assumed to be ‘0’, these pathways are not realised by any student
in the base case. That said, these probabilities are utilised in later sensitivity analyses.
Following from the earlier discussion, it is possible that the assumption that no ICAN
students would have otherwise completed year 12 may be too strong. To the extent that
this assumption is inaccurate, the baseline assumptions may understate outcomes and
therefore lead to an overestimate of the ICAN benefits.
At the same time, however, the data utilised to define post-schooling outcomes in the
base-case is derived for a population that does not sufficiently match the characteristics of
ICAN participants, in that it does not reflect a comparable level of disadvantage. As a result,
it is thought that these baseline assumptions overstate outcomes and therefore lead to an
underestimate of the ICAN benefits.
4.1.2
ICAN scenario
A similar process to that applied in the baseline is conducted in defining probabilities for
ICAN participants, with ICAN destination data used to define these probabilities. Table 4.2
outlines these probabilities, where the pathway numbers again reference the numbers
allocated in Figure 3.1.
Table 4.2: ICAN probabilities
Path #
Pathway description
2007%
2008 %
2009%
2010 %
Av%
Source
% Complete Year 12
46
48
57
57
52
ICAN
destination
data
% In training (assumed a
Certificate III/IV)
14
13
16
9
13
ICAN
destination
data
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Cost Benefit Analysis of ICAN
Path #
Pathway description
2007%
2008 %
2009%
2010 %
Av%
Source
76
ABS Survey of
Income and
Housing (200708)
1
% Employed, given
completed Certificate III/IV
2
% Unemployed, given
completed Certificate III/IV
24
24
24
24
24
ABS Survey of
Income and
Housing (200708)
3
% Employed, given
completed Year 12 only
42
22
21
36
30
ICAN
destination
data
4
% Unemployed, given
completed Year 12 only
44
66
63
55
57
ICAN
destination
data
% Does not complete Year
12
54
52
43
43
48
ICAN
destination
data
% In training (assumed a
Certificate I/II)
19
34
20
12
21
ICAN
destination
data
63
ABS Survey of
Income and
Housing (200708)
76
76
76
76
5
% Employed, given
completed Certificate I/II
only
6
% Unemployed, given
completed Certificate I/II
only
17
17
17
17
37
ABS Survey of
Income and
Housing (200708)
7
% Employed, given no Year
12 or equivalent
31
19
23
31
26
ICAN
destination
data
8
% Unemployed, given no
Year 12 or equivalent
50
47
57
57
53
ICAN
destination
data
63
63
63
63
In a similar vein to the baseline data, it is expected that the ICAN scenario data utilised here
might not sufficiently match that actual destinations of these individuals, as it is intended
destination and as reported by a third party rather than the individual themselves. The bias
could go either way, though the more time elapses the more chance an individual has to
enter employment or further training, in which case the bias would again be downward.
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Cost Benefit Analysis of ICAN
Figure 4.1: Modelling assumptions — probability of an ICAN student pursuing a pathway, conditional on ICAN participation^
^Average probability is determined by multiplying probabilities along one ‘arm’ of the probability tree. Taking the top line for example:
5% = probability of completing year 12 given ICAN (52%) x probability of entering training (13%) x probability of being employed(76%)
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Cost Benefit Analysis of ICAN
4.1.3
Costs and payoffs
A series of assumptions are applied consistently across the baseline and ICAN scenario as it
relates to the payoffs of particular pathways – so that, the only factor driving the
differences in the payoffs overall is the proportion of individuals on each pathway.
For instance, it is assumed that anyone who enters into training after completing Year 12
will remain in training (and not earning a wage) for two years – assumed a Certificate III/IV.
It is also assumed that anyone who enters into training without completing Year 12 will
remain in training (and not earning a wage) for only one year – assumed a Certificate I/II.
Their employment status and wage is then determined upon the completion of their
training, as it relates to the employment and wage rates of persons holding those
qualifications as their highest. Social costs are set to zero as no reliable benchmarked data
was available regarding the prevalence of these social costs for people of comparable
characteristics to the ICAN cohort. Social costs are discussed qualitatively in Section 4.5.
The payoff schedule is presented in Table 4.3, where all values are presented in 2012
dollars.
Table 4.3: Payoffs in 2012 AUD
Path #
Payoff
2007
2008
2009
2010
1; 9
Average Wage (1)
$ 38,006
$ 38,006
$ 38,006
$ 38,006
3; 5; 11; 13
Average Wage (2)
$ 31,236
$ 31,236
$ 31,236
$ 31,236
7; 15
Average Wage (3)
$ 16,628
$ 16,628
$ 16,628
$ 16,628
2; 4; 6; 8; 10;
12; 14;16
Social cost
n/a
n/a
n/a
n/a
Source: ABS (2008), Survey of Income and Housing
On the costs side, the Department has provided ICAN program expenditures and grants
organised by year and funding source (State or Federal)20:

Salaries

Operations

Grants made to schools – paid directly to DECD Schools

Grants paid to external organisations such as service providers or local councils.
Given ICAN has been in an expansion phase to this point, it was noted that the cost per
participant varied significantly across the four years of interest to this study.
As the variation in cost largely reflects the timing at which this study is occurring, as
opposed a change in the level of recurrent funding required to sustain the program, a
weighted average of costs across the years was derived. Also, given that this analysis is
20
As noted earlier, FLO funding that goes to schools in both the baseline and ICAN scenarios is excluded. Also
Commonwealth Funding under the National Partnership is included, as would otherwise be direct elsewhere in
the State.
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Cost Benefit Analysis of ICAN
conducted on people who complete their involvement with ICAN, and in a typical year twothirds of participants carry-on for a second or further years of engagement with ICAN, the
mid-point of the per participant and per exit average cost is taken. On this basis, it is
estimated that the average cost per ICAN participant is approximately $2,780.
It is possible that this cost calculation method does not account for additional enrolment
costs associated with students re-enrolling in school as a result of the ICAN program where
they may not have otherwise attended. Nonetheless, sensitivity analysis is conducted in
Section 4.6 to consider the impact of raising cost per ICAN participant on the CBA.
4.2 Direct benefit estimation
Table 4.4 presents this study’s estimate of the quantifiable benefits of ICAN. Estimates are
presented for the benefits at 5-year, 10-year and 40-year time horizons. A 1-year benefit
estimate does not account for the payoff of a young person who enters into further training
and is therefore not presented.
From these results it can be seen that the ICAN program benefits compound over time, and
that based on the data available the 5-year direct benefits are estimated to be $9.5 million
(provided no additional investments are made in preserving these pathways over that 5year period).
Table 4.4: Estimate of ICAN benefits in 2012 AUD 21
2007
2008
2009
2010
Total
5 year ($m)
10 year ($m)
40 year ($m)
$4.0
-$0.2
-$1.3
$6.8
$9.5
$7.8
-$0.4
-$2.7
$12.2
$17.0
$30.1
-$1.4
-$11
$64.9
$82.7
4.3 Direct cost estimation
Table 4.5 presents the net present quantifiable total costs of ICAN, over the period 2007–
10. The cost comprises the upfront outlay under ICAN, as well as the training cost incurred
by the State for those who continue into further education, where the training cost under
the baseline is net-off the training cost under ICAN to reveal the incremental cost (the
assumption is that this training is all in the Vocational Education and Training sector 22).
21
For some years, benefits are found to be ‘negative’. This indicates that the benefit estimated under the base
case exceeds the benefit estimated under the ‘ICAN’ scenario. As discussed in later sections, it is possible that
such outcomes are driven by the limitations of the data and assumptions which underlie the model.
22
ICAN destination data suggests only 2 of 2358 ICAN exits intended to progress to university upon completion,
therefore all further education is assumed to be in the VET sector and therefore a cost that accrues to the State
at an average annual cost of $3000 (Source: DAE).
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Given ICAN program costs and further training costs are incurred over the initial 2-year to
3-year period for any one ICAN cohort, they are constant over the alternative time horizons
reported. The direct costs are estimated to be $5.3 million over the ICAN program
years/cohorts (before including leveraged private contributions and in-kinds).
Table 4.5: Cost estimates in 2012 AUD
Year
Cost ($m)
2007
2008
2009
2010
$0.7
$1.3
$1.4
$1.9
Total
$5.3
4.4 Net position
Table 4.6 outlines the net present (direct) benefits of ICAN. Estimates are presented for 5year, 10-year and 40-year time horizons. Again a 1-year net-benefit estimate does not
account for the net-payoff from a young person who enters into further training, and is
therefore not presented.
From these results it can be seen that the ICAN program net-benefits/costs compound over
time, and that based on the data available the 5-year (direct) net benefit of the ICAN
program is estimated to be $4.1 million (provided no additional investments are made in
preserving these pathways over that 5-year period).
Table 4.6: Net benefit estimates in 2012 AUD
2007
2008
2009
2010
Total
5 year ($m)
10 year ($m)
40 year ($m)
$3.3
-$1.5
-$2.7
$5.0
$4.1
$7.0
-$1.6
-$4.1
$10.3
$11.7
$29.4
-$2.7
-$12.4
$63.0
$77.4
Table 4.7 presents the benefit-to-cost ratios (BCRs) of ICAN23. Estimates are presented at 5year, 10-year and 40-year time horizons.
From these results it can be seen that the ICAN program BCRs compound over time, and
that based on the data available the 5-year benefit-to-cost ratio is on average 1.8
(provided no additional investments are made in preserving these pathways over that 5year period). As such, every dollar invested in the program returns $1.80 in direct economic
value.
23
Where the BCR is greater than 1, the program benefits exceed the costs. Where the BCR is less than 1, the
costs of the program exceed the benefits. Where the BCR is less than 0, the benefits of the program are
negative.
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Table 4.7: Benefit Cost Ratios
5 year
10 year
40 year
2007
2008
5.5
<0
10.5
<0
40.7
<0
2009
2010
Total
<0
3.6
1.8
<0
6.5
3.2
<0
34.5
15.6
In interpreting the BCRs above, it is important to be mindful of three key caveats:

Data limitations – both the control and scenario data which is currently available for
ICAN assessment is limited in a number of ways, and are more likely bias the net
benefits downward than upward.

Timing – the ICAN program is in its inception phase, and as such, is unlikely to have
been optimised in terms of cost-effectiveness.

Accounting for intangible benefits – benefits that cannot be quantified are discussed
qualitatively below and are additional to those captured above.
To some extent these limitations can be addressed over time through improved data on
ICAN participants and their non-participating counterparts, as considered at Chapter 5.
4.5 Non-quantifiable benefits
Programs such as ICAN serve to improve equity in the community, by enabling
disadvantaged individuals to attain the economic and social benefits associated with
employment, further education and/or a meaningful role in their community. Furthermore,
the program leads to other direct benefits for the community, including: the promotion of
integrated local services, the building of community capacity and the fostering of innovative
local solutions to support young people.
The model used to define the quantitative elements in this study takes account of the direct
benefits that flow from re-engagement with formal learning and the resulting
improvements in employment and further training, namely, wage improvements and
avoidance of particular social costs. However, in addition to these quantifiable economic
benefits, a number of qualitative benefits can be attributed to the ICAN program.
The likelihood of experiencing financial hardship and poverty is increased for early school
leavers and this can have a wide range of impacts including debt, homelessness and
housing stress, family tensions and breakdown, boredom, alienation, shame and stigma,
increased social isolation, crime, erosion of confidence and self-esteem, the atrophying of
work skills and ill-health (McClelland and Macdonald, 1998).
According to the Australian Social Inclusion Board (2010), participating in schooling and
completing a Year 12 or Certificate II assists people to find employment, participate in
community activities and improve their wellbeing. Education also provides a pathway out of
disadvantage, particularly for people in low socioeconomic groups.
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Applied Economics (2002) quantified the value of non-market benefits (including improved
health status of students and their family members, increased efficiency of consumer
choice, crime reduction and an increased social interactions and contributions to the
community) of one more year of schooling. They estimated that the benefits would be
around 20% of the increase in earnings, although they note that this may significantly
underestimate the social contributions of more secondary education. Their estimate was
conservative compared to Wolfe and Haveman’s (1984) who suggested that non-market
benefits may be of the same magnitude as estimates of the earnings-based effects.
Hankivsky (2008) assigned costs associated with high school non-completion in Canada to a
number of tangible impacts. This included the impact on health (including mortality and
morbidity), social assistance, crime, labour/employment and education/research. She
estimated the annual costs per dropout to be around $8,000 in private health costs and
$220 in public crime costs.
The Applied Economics (2002) estimate is a broad estimate that does not estimate
individual impacts. However, many qualitative impacts could be considered in more detail.
The following evidence-based discussion is organised around some of the more tangible key
themes:

the causal link between participation in formal education and improved health
outcomes and life satisfaction;

the causal link between participation in formal education and criminal behaviour;
and

the intergenerational returns to participation in formal education.
4.5.1
Educational attainment and health
Health outcomes
There is a growing body of literature that suggests a strong correlation between
educational attainment and health. Indeed, the association is so persistent (even
increasing) and evidenced across numerous countries and time periods that it has been
established as a ‘gradient’ (Conti et al, 2010). The literature in this area has it well
documented that more educated individuals in turn, have better health later in life and
better labour market prospects (Currie, 2009; Cutler and Lleras-Muney, 2010).
Education can influence health through a range of complex mechanisms, for instance
(Cutler et al 2007, Cutler et al 2010):

through its relationship with labour market participation (employment) and thus
income and access to health care and insurance;

through knowledge formation and cognitive development, which impact decisions and
behaviours;

through the development of social networks and access to information and services;
and

through its association with health behaviours such as smoking and obesity and
preventative service use.
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To the extent that leaving school early reduces expected earnings and that poor health is
more common in people who suffer from low levels of resources (Chart 4.1) or are
unemployed (ABS, 2011), people who have not completed Year 12 are more likely to
experience poor health outcomes. This in turn can result in poor labour market outcomes
and affect family relationship, child development and other social outcomes, so these
impacts have a reinforcing nature which can lead to entrenched disadvantage (Australian
Social Inclusion Board, 2010).
Chart 4.1: Self-assessed health, by income quintiles, 2010
Source: ABS (2011) General Social Survey 2010, Cat No. 4159.0
School completion affects risky health behaviours. For instance, in 2004 the prevalence of
smoking among Australian adults was 30% for people who had completed Years 10 or 11,
but only 21% for people whose highest level of formal education was Year 12 or postsecondary qualifications, while it was only 11% for people who had attended university
(Scollo and Winstanley, 2008).
Estimates are available for the economic and social cost of smoking, which increases the
risk of various cancers and cardiovascular disease. Collins and Lapsley (2007) estimated that
the cost of smoking was around $31 billion in 2004. This included 38% of tangible costs
(such as reduced workforce, absenteeism, premature death, sickness and health care costs)
and 62% of intangible costs (such as loss of life or reduced quality of life). In 2004-05, 3.5
million persons were current smokers (ABS, 2006). Based on that estimate, the average cost
per smoker was estimated to be around $8,857 per annum. This cost to society could be
significantly reduced by improving educational outcomes.
People with less education (having left full-time schooling before age 16) or who are
unemployed are also more at risk for common mental health problems (Fryers et al, 2005),
obesity (OECD, 2009 and ABS, 2007) as well as increased alcohol consumption (OECD,
2006).
The health benefits of education are particularly pronounced among disadvantaged groups
(see, for example, Chart 4.2). Results from the 2008 National Aboriginal and Torres Strait
Islander Social Survey (NATSISS) show that a higher level of schooling is positively
associated with self-reported health status. Indigenous persons aged 15–34 years who had
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Cost Benefit Analysis of ICAN
completed Year 12 were more likely to rate their health as excellent/very good than those
who had left school at Year 9 or below (59% compared with 49%) (ABS, 2010).
A similar pattern of association was evident between higher levels of school completion
and levels of psychological distress and risky health behaviours. When compared with
Indigenous people who had left school at Year 9 or below, those aged 15-34 years who had
completed Year 12 were:

less likely to be current daily smokers (34% compared with 68%);

less likely to have reported high/very high levels of psychological distress in the last
four weeks (29% compared with 35%); and

less likely to have used an illicit substance in the last 12 months (23% compared with
32%).
Chart 4.2: ATSI health outcomes by educational attainment, 2010
80%
70%
60%
50%
40%
30%
20%
10%
0%
Excellent/Very
good self-assessed
health status
High/Very high
phsychological
distress
Current daily
smoker
Year 12
Long-term
risky/high risk
alcohol
consumption
Short-term
risky/high risk
alcohol
consumption
Has used illicit
substance
Year 9 or below
Source: ABS, 2010
Life satisfaction
Subjective quality of life complements more objective measures of wellbeing such as
income and health. Life satisfaction is positively correlated with employment status, but
decreases with hours worked. The unemployed were least satisfied with life (with a
satisfaction score of 7.5 for unemployed compared with a satisfaction score of between 7.6
and 8.2 for people in employment24 (Melbourne Institute, 2011)). Life satisfaction was also
positively correlated with income (people in the lowest income quintile had a life
satisfaction score of 7.8 compared with 8.1 for people in the highest income quintile
(Melbourne Institute, 2011)). To the extent that employment and income are dependent on
educational attainment, Year 12 completion has a positive impact on life satisfaction.
24
Each year, HILDA Survey respondents are asked,‘All things considered, how satisfied are you with your life?’
The response scale runs from 0 to 10, where 0 means ‘completely dissatisfied’ and 10 means ‘completely
satisfied’.
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Participation in ICAN and potential health benefits
To the extent that ICAN improves engagement in formal education for people, who would
otherwise disengage or face serious risk of disengagement, literature suggests that
participants could expect to attain improved health outcomes relative to a scenario where
they did not participate in ICAN.
The various avenues through which engagement with formal education has been
documented to improve health outcomes including savings to government from reduced
health expenditure, as well as the value of flow-on impacts to the individual and community
are not sufficiently captured by the quantitative model and should be treated as benefits
incurred largely in addition to those which were quantified.
4.5.2
Educational attainment and crime
Young people with insufficient education and/or poor literacy skills are disproportionately
found within the criminal justice system. Wolfe and Haveman (2002) cite a number of
studies showing that schooling is associated with reduced criminal activities and that
engagement in formal education is associated with a reduction in recidivism. Callan and
Garder (2005) studied people in the corrective system and found that higher levels of
education implied a reduced likelihood of returning to the corrective system.
ABS data indicates that prisoners have a lower level of educational attainment than the
general Australian population (AIHW, 2009). In 2006, almost two-thirds of the general
population aged 25–34 years had completed Year 12, compared with just 14% of prison
entrants in that age group. More than one-third of prison entrants (36–37%) had a highest
completed level of schooling of Year 9 or less, compared with around one in twenty (4–8%)
of the general population.
Moreover, recent empirical studies have begun to uncover a causal relationship between
educational attainment and reduced crime, particularly property crime (Machin, 2011).
Causality aside, there are three main channels through which schooling can influence
criminal participation that have been identified in the literature:

income effects – education increases the returns to legitimate work and/or raises the
opportunity costs of illegal behaviour (Lochner and Moretti, 2004);

time availability – time spent in education limits the time available to participate in
criminal activity (Tauchen et al, 1994); and

patience and/or risk aversion – education can increase patience, which reduces the
discount rate of future earnings and hence reduces the propensity to commit crimes.
Education may also increase risk aversion that, in turn, increases the weight given by
individuals to a possible punishment and consequently reduces the likelihood of
committing crimes (Lochner and Moretti, 2004).
The benefits of crime reduction can be monetised in the sense that it results in costs
avoided, and indeed, there is a lot of data and literature on the social and economic costs
of crime. The Australian Institute of Criminology (AIC) estimates that crime costs Australia
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Cost Benefit Analysis of ICAN
nearly $36 billion a year – some 4.1% of the nation’s gross domestic product. Social benefits
associated with crime reduction include the following costs avoided:

costs to the victim (productivity and wage costs, medical costs and quality of life costs);

property loss;

incarceration costs;

law enforcement and judicial costs; and

private security measures.
A small body of literature links crime reduction benefits – in monetary terms – to
educational attainment. For example, a US study that investigated the effect of high school
graduation on incarceration found that a ten percentage point rise in the rate of high
school graduation would cut the murder arrest rate by between 14% and 27%, and a one
percentage point increase in the graduation rate would lead to a reduction in crime of
between 34,000 and 68,000 offences, with a social benefit of $0.9 billion to $1.9 billion per
annum (Feinstein 2002).
People who have not completed Year 12 are not only more likely to commit a crime; they
are also more likely to be victims of crime themselves. For instance, people who are
unemployed are more likely to be a victim of assault (9.8%) than people who are employed
(5.5%) (Australian Social Inclusion Board, 2010).
Participation in ICAN and potential reduction in criminal activity
To the extent that ICAN improves engagement in formal education for people, who would
otherwise disengage or face serious risk of disengagement, literature suggests that
participants could expect to be associated with lower levels of engagement in criminal
activities or fall into a pattern of recidivism.
The following is an example of the likely impact of ICAN. There was a 39% reduction in
youth crime over the first two years of the introduction of the ICAN program In Port Pirie in
2006–7. There were no other initiatives or programs in the town at the time, which could
explain the change (Jodie Gregg-Smith, ICAN Regional Manager, Northern Country).
Improvements in crime rates have significant positive implications for the community,
including, and extending beyond, costs associated with litigation and incarceration. This
social benefit is not sufficiently captured by the model prepared for this study and should,
therefore, be treated as largely additional to those benefits which have been quantified.
4.5.3
Intergenerational impacts
Even if health and social welfare benefits aren’t accrued immediately as a result of
additional education attainment (i.e. the individual’s health and welfare outcomes aren’t
improved as a result), there is a large body of evidence suggesting that educational
attainment works to break the cycle of intergenerational disadvantage by impacting
outcomes for succeeding generations. Indeed, people with at least one parent with a year
12 completion are much more likely to complete year 12 themselves (66% versus 55% of
individuals, Chart 4.3)
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Chart 4.3: Proportion of persons who complete year 12, by parents’ highest educational
attainment
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Neither parent completed
Year 12 or higher
One parent completed Year Both parents completed Year
12 or higher
12 or higher
Source: ABS (2011)
There is undoubtedly an identified link between intergenerational disadvantage and low
educational attainment—inadequate education and training is a common factor in
Australia’s most disadvantaged communities (Vinson et al. 2007). According to the ABS
Survey of Education and Training only 50–60% of 20–24 year olds living in the most
disadvantaged areas (as measured by the SEIFA Index of Relative Socio-economic
Disadvantage) had year 12, compared to around 75% of that age group as a whole. Thus,
breaking the intergenerational cycle of low educational attainment will flow on to
alleviating other forms of disadvantage such as low socioeconomic status and poor health
and welfare outcomes.
Participation in ICAN and intergenerational impacts
The modelling considers a subset of impacts on the individual who participates in the
program and, to some extent, costs avoided by the community as a result of that
individual’s participation. The model does not, however, account for intergenerational
impacts of participation in the ICAN program. Intergenerational benefits of the ICAN
program are realised to the extent that these flow-on impacts serve to permanently alter
the course of not only the individual participant’s prospects, but the prospects of their
children. These benefits should be viewed as additional to the benefits accounted for in the
qualitative CBA model.
4.6 Sensitivity analysis
Given the inherent uncertainty that applies in any cost benefit analysis, in particular where
the data has not been fully validated, this section re-estimates the net-benefit/cost of ICAN
under alternative assumptions. The purpose of sensitivity analysis is to test the strength of
the findings against possible variation in the assumptions that underlie them.
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In line with the key uncertainties in the data applied in this study, three sensitivity scenarios
are considered below:

Using LSAY Year 12 completion rates — LSAY year 12 completion rates for students
from a low socioeconomic background are substituted for the current assumption that
no ICAN student would have completed year 12 in the absence of the ICAN program.

Determining the break-even point by varying completion rates — the minimum
improvement in Year 12 completion rate required for the program to break-even is
determined.

Determining the break-even point by varying costs of the program – the minimum
average cost of the program, per program completion, at which the program continues
to break even is determined.
Furthermore, a simplistic estimate of the flow-on costs and benefits of ICAN is provided, by
way of inferring the total (direct + indirect) effect on economic welfare in South Australia.
4.6.1
Using LSAY Year 12 completion rates
For this sensitivity, LSAY data was used to determine Year 12 completion rates amongst
young people of low socioeconomic status. The scale used to determine low socioeconomic status amongst LSAY participants was the household ‘International SocioEconomic Index’ (ISEI).
The ISEI measure utilised in this study allocates a socioeconomic ranking on the basis of the
intended occupation of the individual at age 30, with the Year 12 completion status for the
lowest quartile of LSAY participants applied here. It is likely however, that given the
demographic profile of ICAN participants (section 2.4.2), the average completion rate
amongst the lowest quartile of LSAY participants will overestimate completion rates for an
ICAN comparable population.25
LSAY data suggests that the Year 12 completion rate amongst students within the lowest
socioeconomic quartile in Australia is 47%. This estimate, as anticipated, is considerably
higher than the base case assumption of 0%. Table 4.8 below provides the revised net
benefit estimates over a 5-year period – under this assumption the program appears to
incur a net cost to South Australia.
Table 4.8: Net benefit estimates using LSAY Year 12 completion rates
5 year ($m)
2007
2008
2009
2010
Total
-$1.0
-$8.4
-$10.6
-$7.3
-$27.3
25
Nonetheless the use of these estimates is necessitated by the small sample sizes in LSAY for a more defined
group of disadvantaged young people and the spurious effect this has on the estimates.
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Cost Benefit Analysis of ICAN
This analysis illustrates the results are clearly sensitive to the Year 12 completion rate in the
base case, and therefore the need exists to develop a better quantitative basis for this.
Large scale data sets such as LSAY are not able to accurately capture outcomes for a
targeted population that is characterised by a high level of disadvantage (see Chapter 5).
4.6.2
Break-even analysis
Break-even analysis provides a useful illustration of the extent to which a particular
assumption can vary before an investment is no longer cost-beneficial.
In this case, the two assumptions considered are the Year 12 completion rate in the base
case and the program cost per participant – which are earlier identified as the key
assumptions on which the findings depend. Holding all other factors constant:

the ICAN program will break-even over five years up to the point where the base case
Year 12 completion rate is equal to 6.2%.

the ICAN program will break-even over five years up to the point where the per
participant cost of the program is $4,652 (a 67% increase in cost).
Accordingly, ICAN remains cost-beneficial even if the costs of the program are understated
by around 70%; however is likely to incur a net cost to the State (in these narrowly defined
terms) where ICAN participants would otherwise have completed Year 12 at a rate any
higher than around 6%.
4.6.3
Indirect costs and benefits
Beyond the direct costs and benefits of ICAN that are analysed and reported above, indirect
(flow-on) costs and benefits would also reasonably accrue and should be considered at
some level in the measures of impact/success of the program.
In terms of the indirect costs, these relate in the first instance to the economic cost
(inefficiency) of raising taxation revenue to fund the program. Recent estimates of this
economic cost – generated as part of the Henry Review – suggest it costs 24 cents to raise
each additional dollar of taxation revenue, which would suggest the cost of ICAN needs to
be multiplied by 1.24.
In terms of the indirect benefits, these relate in the first instance to the economic benefits
(multiplier effect) of the additional income generated in the South Australian economy
from the additional labour force participation and productivity relating to improved
learning and ultimately earning pathways. An estimate of the multiplier effect – generated
from our in-house general equilibrium model, for a $10 million increase in productivity in
South Australia – was approximately 1.5, which would suggest the benefits of ICAN need to
be multiplied by 1.5.
Applying these indirect multiplication ratios to the net direct effect estimated at section
4.4, the 5-year net-benefit of ICAN increases to $7.7 million (and a BCR of 2.2).
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5 Future data collection
In presenting a framework for updating this CBA with more valid data, the strongest
learning is that the case exists for continuing to refine the outcomes reporting around ICAN.
In improving data collection, the benefits of the ICAN program might be more reliably
reported and will at the very least provide a useful and robust basis for instituting
evidenced-based improvements to the ICAN program over time.
5.1 Improving ICAN program data
The ICAN program represents a major policy intervention that seeks to address the needs
of young South Australians (from Year 6 to 19 years of age) who have disengaged from
school or who are at serious risk of doing so. ICAN was established to assist these young
people to re-engage with learning and successfully return to school and / or embark on a
pathway to further education, training and employment.
Following from this, the key inputs and assumptions that could be revised in future work
would include (by cohort) the:

Probability of completing Year 12 having engaged in ICAN.

Probability of progressing to further study having engaged in ICAN.

Probability of progressing to employment having engaged in ICAN.

Probability of avoiding particular social costs having engaged in ICAN.
In order to satisfy these data requirements, a small number of questions would need to be
asked of the program participants themselves at a period post-program completion, for
instance 12 months following completion of the program. The nature of these questions
might be as follows:

Are you currently completing Year 12/in further study/in employment?

Have you completed Year 12 or an equivalent? (if relevant)

What occupation are you employed in? (if relevant)

What course of study are you currently enrolled in? (if relevant)

What are the reasons you are currently not looking for work? (if relevant)

What are the reasons you are currently not studying? (if relevant)

What are the reasons you have not completed Year 12? (if relevant)

How have you benefited from accessing ICAN?

What is it about ICAN that suited you/did not suit you?

Would you recommend ICAN to others?
The results could be cross-checked against a survey of case managers, schools and
community organisations – referencing similar themes and seeking a greater understanding
of the spillover benefits of the program and the drivers of its success.
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5.2 Improving the base case
Addressing the suitability of the control group (baseline) data is less straightforward. As a
starting point, a more systematic collection of the risk of disengagement for a student, prior
to commencing the ICAN program, could improve the understanding of the impact the
program has on completion of formal education.
Developing an accurate base case for post-schooling outcomes, however, is more difficult.
The manner by which national and state data is currently collected will inherently bias the
samples toward a more advantaged group that those who participate in ICAN (where the
most disadvantaged will tend to be excluded or drop out of these surveys). Short of a
controlled experiment, there is little that can be done to improve this situation in the
immediate term.
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Cost Benefit Analysis of ICAN
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