• Trish Hill, Cathy Thomson, Bettina Cass
• Department of Families, Housing, Community Services and Indigenous Affairs

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Image: William Yang / flickr

16 August 2011Informal carers are people who provide unpaid help, support or assistance to family members or friends with disability, chronic illness, mental illness, other illness, or alcohol or other drug problems. Recent estimates suggest that around 16 per cent of the adult population in Australia provide informal care and that the majority of people who require help or assistance receive support from family or friends. Demographic and policy changes have increased the demand for informal care over recent decades and projections suggest that the need for informal carers is likely to increase with an ageing population. Women, who are often the main providers of informal care, are entering the labour force in increasing numbers. Thus it is likely that many will encounter the challenges of negotiating the competing demands of caring and paid employment. The evidence suggests that, given limited alternative care arrangements, many carers adapt to their caring role by reducing or leaving employment. This outcome has implications for their short-term and long-term financial security and retirement incomes.

The economic value of the contribution of informal carers to the Australian economy has been estimated at over $40 billion a year, if all the care was to be replaced by formal services (Access Economics 2010). The social value of informal care is immense, because care provided by family or friends enables others to remain in their home, connected to their family and community. Yet the available evidence suggests that, under the current policy settings, the contribution of informal carers may significantly affect the lives of the individual carers. The impact of caring may be conceptualised as costs. In the literature, such costs may be interpreted as both indirect and direct costs. The indirect costs of care are the opportunity costs of reducing employment, leisure and other activities to provide care, the time devoted to caring, and the impact caring has on the informal carer’s physical and mental health. International and Australian research suggests that the indirect costs of caring are significant. To understand direct costs requires a conceptual distinction to be made between the direct costs of disability and the direct costs of caring. The direct costs of disability are expenses arising from the needs associated with disability, which may be borne by the person with disability, the carer or a range of other agencies, for example, government, non-government organisations (NGOs) or insurance companies. The direct costs of care refer to the additional monetary expenses incurred by carers as a result of taking on the caring role, which may include home modifications or transport, or health costs for carers to mitigate the stresses associated with caring. The size of the direct costs of disability and direct costs of caring for carers depends on the type of needs of the person with disability and the support provided by formal services and other sources. Little is known about the size of the direct costs incurred by taking on informal care in the Australian context and the most appropriate ways to estimate the extent of such costs.

This project addressed this issue by investigating three research questions:

• What is known about the direct costs incurred in informal caring as distinct from the indirect costs of care?
• What are the most robust methods to investigate the direct costs of care and what data are available in Australia to do so?
• What are the living standards of different subgroups of carers in Australia and what might this imply about the direct costs of care?

The first component of this study reviewed the Australian and international literature on the direct and indirect costs of care. The second component examined and evaluated methods for estimating the direct costs of disability that may provide the basis for disaggregating the direct costs of disability from the direct costs of care. However, this study did not produce estimates of the direct costs of care. This section of the research also scoped existing national datasets to describe the data that are available and the data that would be needed for an analysis of the direct costs of care. The final component of the project consisted of an empirical analysis of the living standards of carers, using four indicators. These indicators included before-housing income poverty, after-housing income poverty, subjective poverty and financial stress.

Image: acon online, William Yang / flickr