Independent Review of the Australian Institute of Health and Welfare

Page last updated: 19 February 2017

Executive summary

Nous Group (Nous) was engaged by the Department of Health (DoH) to review the Australian Institute of Health and Welfare (the Institute). The Review followed a sustained period of uncertainty about the future of the Institute, change in the senior management team and uncertainty regarding membership of the Institute Board. Recent Government decisions regarding the architecture of health information agencies have resolved some of that uncertainty but the salience of the Review remains high.

The environment within which the Institute works has changed radically over recent years. The Australian Bureau of Statistics (ABS) no longer restricts itself to census and survey activity, increasing its activity in relation to analysis of administrative data. Analysis within policy agencies has increased with policy officers accessing data and analytics software to an unprecedented extent. This raises fundamental questions about the role of the Institute into the future. The Institute has both a challenge and opportunity to reposition itself in the health and welfare information landscape. It no longer enjoys a virtual monopoly on integrative analysis of survey and administrative data.

To support consideration of the Institute’s optimal future contribution, Nous reviewed its function at three levels: its role and purpose; its business model, product range and funding model; and its internal governance and organisation. To support this analysis Nous used our format for organisational reviews, breaking each of these levels into constituent components. We gathered evidence from approximately 40 interviews and 140 key documents and validated preliminary findings with a Departmental reform management board and the Institute’s Board and management team.

The Institute is well positioned for its future in a number of key dimensions. It is well respected for its independence and ethical frameworks, its professional staff and the quality of its products. Stakeholders value each of these features highly and do not want to see any changes that imperil these qualities. It needs to be acknowledged also that many of the directions recommended in the Review are in areas already the subject of work within the Institute. Considerable effort and progress has been made in a number of these. The Government decision to transfer the performance reporting role currently performed by the National Health Performance Agency (NHPA) to the Institute creates an opportunity decisively to build on this solid foundation.

That said, the Review’s fundamental finding is that the Institute needs to undertake a major organisational transformation program to reinstate full stakeholder confidence and secure its future role as an indispensable, internationally leading information agency in the health and welfare sector. Elements of this transformation program include working proactively and collaboratively with partners to refresh its charter, business models and product range. A comprehensive set of recommendations are provided in the following section.

In order to support this transformation program a number of reforms are needed within government departments and collectively by health and welfare administrations. The budget for the Institute needs to move from being based on 30% appropriated core funding (and 70% fee for service income) to at least 50%, preferably closer to 70%, appropriated funding. Funding departments need to much better coordinate their engagement with the Institute and to prioritise their requirements from increased appropriation funding. From a whole of government perspective the Institute and Commonwealth departments need to align the development of data sets, processes and trusted user arrangements with developments underway across the Commonwealth. A review of information plans across different sectors is also needed.

Jurisdictions collectively, also need to engage at a more strategic level with each other and then with the Institute regarding priorities. The Review noted that this presents particular challenges in the welfare sector, with separate welfare information coordination mechanisms now in place across different aspects of the welfare spectrum – housing, community and disability services. Jurisdictions – both Commonwealth and State and Territory – need to support the optimal contribution of the Institute by improving the timeliness of data provision and reconsidering the restrictive basis of data provision to the Institute. Otherwise the Institute will not be able to meet the expectations of jurisdictions for improved timeliness and salience of Institute products and services.

The Review was commissioned by the Commonwealth and, therefore, addresses its recommendations to the Commonwealth. It recommends the Commonwealth provide leadership by engaging with States and Territories to advocate these collective improvements.

Finally the Review team would like to acknowledge the high level of cooperation and professionalism of the Institute staff and management as well as that of the departmental staff and stakeholders with whom we have interacted during the process.

Conclusions and recommendations

The Review concludes that:

The Institute must undertake a major organisational transformation program to reinstate full stakeholder confidence and secure its future role as an indispensable, internationally leading information organisation in the health and welfare sector.

Specifically, the organisational transformation program must ensure that the Institute effectively, and without disruption, continues the functions transferred from NHPA. The transformation must take into account the fundamental differences between the current work of the AIHW and that of the NHPA and the implications this will have for governance, data access, internal processes and external relationships.
We have identified the key elements to deliver the transformation in the following recommendations.

Key recommendations – Key line of enquiry 1

What opportunities exist to enhance the Institute’s role as a provider of whole-of-system health and welfare information, analysis and statistics? (Future purpose and strategy)

Future role

R1. The Institute’s Board, in consultation with all its stakeholders, should establish a charter for the Institute’s enhanced international and national role and for the value it offers the nation.
R2. The Institute should provide Government, within one year, with a five year strategy to fulfil its Charter.
R3. The Institute should re-launch itself to reflect a refreshed charter, strategy and communications approach.

Key recommendations – Key line of enquiry 2

Products and services

R4. The Institute should, within one year, conduct a full stocktake of its products and services, and the NHPA products and services it will acquire, to rationalise, modernise and digitise its product suite.
R5. The Institute should continue to produce Australia’s health and Australia’s welfare reporting and continue the NHPA health system performance reporting conducted under the Performance Accountability Framework (pending the outcomes of the current review of the framework).
R6. The Institute should develop a new service offering that provides well organised data and structured training to clients.
R7. The Commonwealth should work with states, territories and other stakeholders to modernise Australia’s health performance frameworks to support a whole-of-system approach to performance analysis, monitoring and reporting.
R8. The Commonwealth, with jurisdictions, should develop agreed roles and responsibilities for health and hospital classifications to remove duplication.
R9. The Institute should identify, in consultation with jurisdictions, new and priority health and welfare data linkage projects to better inform public policy and service redesign.

Funding model

R10. The Commonwealth should implement a revised funding structure for the Institute, which facilitates a more strategic, long-term and flexible approach to its priorities and work program.
R11. The Institute should develop a financial strategy, a published pricing policy and a process for prioritisation and signoff of commissioned work by the Commonwealth and jurisdictions. The pricing policy should be more transparent about relationship to cost.
R12. DoH and DSS should establish a new governance and coordination mechanism for DoH and DSS to manage the development, implementation and monitoring of the work program funded by the Departments (including a single coordination point).

Key recommendations – Key line of enquiry 3

What organisation design will most efficiently and effectively support the Institute’s future purpose, strategy and business model?

External alliances

R13. The Institute should establish a multilateral collaboration arrangement with the ABS, ACSQHC, IHPA and the Productivity Commission for RoGS to eliminate duplication and drive opportunities for cooperation.
R14. The Institute should prioritise its partnerships (current and future) and identify how key partnerships will be developed and maintained for strategic purposes.
R15. The Institute and the jurisdictions should define their respective roles and responsibilities in relation to the implementation of existing sub-jurisdictional performance reporting agreements.


R16. The Institute should ensure business continuity of all processes related to the delivery of NHPA products and services, including performance reporting.
R17. The Institute, in collaboration with data providers, should ensure its data collection and linkage processes promote ‘single provision, multiple use’.
R18. The Institute should reform its report production process to allow for more timely release of products.
R19. The Institute should establish regular evaluations of its products and services including customer satisfaction measures.
R20. The Institute should continue to reform its project management framework.


R21. The Institute should develop, attract, recruit and retain critical capabilities, especially in relation to ‘cutting edge’ data modelling and analysis, performance reporting, communications, and transformation.


R22. The Institute should build on its internal culture, and that of NHPA, to develop clear values and behaviours for staff engagement outside the organisation.

Office space

R23. DoH should determine the long term forward plan for office accommodation in Sydney, in consultation with the Institute and NHPA.

Structure and functions

R24. The Institute should revise its structure to accommodate the transfer of NHPA functions and be consistent with agreed design criteria.
R25. The Institute should actively look for opportunities to share corporate services with DoH and other agencies as appropriate.

Information management

R26. The Institute should accelerate the upgrade of METeOR.
R27. The Institute should expand membership of Validata to increase the quality of data collection in Australia.
R28. The Institute should ensure continuity of NHPA information systems and data supply and additionally draw on NHPA’s expertise to accelerate and automate data analysis and report production.
R29. In consultation with the Institute, DoH should implement full access to MBS and PBS data as soon as practical in order to identify trends and correlations across health and welfare data sets.


R30. DoH and DSS, through the relevant ministerial councils, should each establish strategic information planning and funding structures to better direct the Institute’s work program.
R31. The Institute should rationalise and align all their advisory committees with the forward work program.
R32. The Commonwealth should urgently move to fill current and soon to be vacant Board positions to ensure leadership stability for the Institute.
R33. DoH and the Institute should urgently move to fill current and soon to be vacant Executive positions to ensure leadership stability for the Institute.
R34. The Commonwealth should develop an improved governance model for the Institute which reflects the new NHPA functions, a smaller, skills-based rather than representative Board, longer term Board appointments and a clearer definition of the role and responsibility of each Board member.
R35. The Commonwealth should propose the necessary amendments to the Australian Institute of Health and Welfare Act 1987 (Cth) to implement the revised arrangements and functions.

To obtain a full copy of the Independent Review of the Australian Institute of Health and Welfare report please email