A Case for Social Procurement - Social Traders

SOCIAL ENTERPRISE: MAKING IT WORK A CASE FOR SOCIAL PROCUREMENT EXECUTIVE SUMMARY ...................................................................................................... 3 SECTION 1 – INTRODUCTION ........................................................................................... 5 SECTION 2 – BACKGROUND ............................................................................................. 9 SECTION 3 – OPERATION AND CONTRACT MANAGEMENT .......................................... 19 SECTION 4 – ECONOMIC ANALYSIS................................................................................ 27 SECTION 5 – SOCIAL IMPACT ASSESSMENT ................................................................. 30 SECTION 6 – RISK ............................................................................................................ 36

COST BENEFIT AND SOCIAL IMPACT ASSESSMENTS SUMMARY OF MAIN FINDINGS........................................................................................ 41 INTRODUCTION................................................................................................................ 43 BACKGROUND ................................................................................................................. 45 COST BENEFIT ANALYSIS................................................................................................ 52 SOCIAL IMPACT ASSESSMENT ....................................................................................... 56 APPENDIX A...................................................................................................................... 61

SOCIAL IMPACT ASSESSMENT REPORT EXECUTIVE SUMMARY .................................................................................................... 70 INTRODUCTION................................................................................................................ 73 OVERVIEW: SETTING UP THE SOCIAL ENTERPRISE .................................................... 79 SOCIAL IMPACT ................................................................................................................ 84 IMPACT OF THE SOCIAL ENTERPRISE ON INDIVIDUALS .............................................. 97 THE FUTURE OF MGC KENSINGTON............................................................................ 101

A Case for Social Procurement

Prepared for AMES and Urban Communities November 2011

Mark Quinn (AAIQS) Property Cost Management & ADVISORY, Melbourne

This evaluation was funded by DEEWR and VicHealth

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The purpose of this report is to outline a case for social procurement based on experience in providing cleaning services on the Kensington Redevelopment. The report has been prepared by Mark Quinn (AAIQS) Property Cost Management & ADVISORY, Melbourne for AMES and Urban Communities. Mark Quinn (PCMA) is a Quantity Surveyor with over 30 years’ experience in the Property and Construction Industry. He was a local director in Melbourne of an International Quantity Surveying Firm for many years before establishing PCMA in 2010. Mark’s experience includes establishing advisory services focusing on the capital and operational cost of property. Apart from working with developers and owners of major property developments, Mark has led numerous due diligence projects for individual investors and for portfolios for property funds purchasing or divesting in property. He has also provided financial analysis for project companies to assist in the evaluation and bidding for PPPs in social infrastructure. November 2011

ACKNOWLEDGEMENTS The following organisations have contributed to compiling this report.

Urban Communities

AMES

Charter Keck Cramer

ATTACHMENTS 1.

Charter Keck Cramer Cost Benefit & Social Impacts Assessments

2.

AMES Social Impact Assessment

ABBREVIATIONS CALD

Culturally and Linguistically Diverse

CBA

Cost Benefit Analysis

CKC

Charter Keck Cramer

DEEWR

Department of Education Employment and Workplace Relations

DHS

Department of Human Services

ILM

Intermediate Labour Market

MGC

Magic Green Clean

UC

Urban Communities

SOCIAL ENTERPRISE: MAKING IT WORK

A CASE FOR SOCIAL PROCUREMENT

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CONTENTS EXECUTIVE SUMMARY ..................................................................................................... 3 SECTION 1 – INTRODUCTION .......................................................................................... 5 1.1

Preamble ................................................................................................. 5

1.2

Methodology............................................................................................ 6

1.3

Statement of purpose and conditions ...................................................... 8

SECTION 2 – BACKGROUND ............................................................................................ 9 2.1

The Kensington Redevelopment ............................................................. 9

2.2

Stakeholders ......................................................................................... 11

2.3

The social enterprise business model ................................................... 14

SECTION 3 – OPERATION AND CONTRACT MANAGEMENT ....................................... 19 3.1

Repairs, maintenance and operation..................................................... 19

3.2

Standard contracts ................................................................................ 20

3.3

Specification and scope for cleaning ..................................................... 21

3.4

Review of costs ..................................................................................... 22

3.5

Life cycle implications............................................................................ 24

SECTION 4 – ECONOMIC ANALYSIS .............................................................................. 27 4.1

Cost benefit ........................................................................................... 28

SECTION 5 – SOCIAL IMPACT ASSESSMENT................................................................ 30 5.1

Theoretical modeling ............................................................................. 31

5.2

Qualitative evaluation of social impact .................................................. 32

5.3

Evidence from the interviews ................................................................ 34

SECTION 6 – RISK............................................................................................................ 36 6.1

Evaluation of risk ................................................................................... 36

Property Cost Management & ADVISORY, Melbourne

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EXECUTIVE SUMMARY This report reflects on the social enterprise established as part of the operation of the Kensington Redevelopment as a case for social procurement. The report finds, based on the observations, management practices and benefits drawn from this project, that through the establishment or expansion of similar enterprises, housing estate services can be delivered at a market competitive cost and should be encouraged as a means for leveraging additional economic and social benefits off the delivery of estate services. These benefits include:

deriving long term value through sound asset management practice in social housing environments

contributing to community wellbeing and social cohesion

reducing unemployment with the associated economic and social benefits

The existing commercial cleaning contract at Kensington provided an opportunity for Urban Communities and AMES to accelerate a social enterprise through investment provided through both federal and state government funding. The investment made available through the Federal Government Jobs Fund in 2009 provided seed capital to establish the enterprise at Kensington. The project also accessed training funds under an established program – the Victorian Training Guarantee (an initiative of the Victorian Government). As a result the enterprise was able to fulfill the service contract for Kensington whilst employing and training a number of long term unemployed job seekers. The project aimed to establish an evidence base for social procurement. As a baseline it was established that by adopting a social enterprise model the delivery of a service contract to industry standards was achievable alongside the economic and/or social benefits accrued to government, the community and individuals. A review of cleaning services delivery under the enterprise with incumbent contractual conditions provided a market comparison for social procurement. This review also highlighted the value propositions for property and asset management of a housing estate whilst contracting with a social enterprise including:

delivery to the estate in commercially comparable terms

no perceived additional exposure to risk of service delivery or failure

greater asset protection through interaction between service provider and management

a perception that the useful life of finishes (carpet, tiled surfaces, etc) is 1

prolonged providing a forecast 11% efficiency in the use of capital over time

1

Given that only a short period has passed only theoretical examples of increased useful asset life are possible at this stage of the project.



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The economic analysis2 suggests that, on a net present value basis over a 20 year analysis period, the project may return tenfold the original funding through higher wages, taxation revenue, retail and other expenditure. A key long term benefit of this social enterprise is facilitating the transfer of the longterm unemployed to employment. In addition to generating new taxation revenue, this transfer also removes the need for government to pay long-term unemployment benefits. On average, this could save government around $17,000 per annum per person ($4,500 from income taxation revenue and $12,500 from unemployment benefits which are no longer disbursed). The Magic Green Clean (MGC) Kensington social enterprise uses an Intermediate Labour Market (ILM) approach as the employment model. This ILM model facilitates the continual movement of unemployed job seekers, firstly into employment in the enterprise and then on to employment in the mainstream labour market. Findings with respect to social impacts demonstrated by the social enterprise were that there were clear social benefits accruing from delivery of cleaning services using this ILM model. Increased employability and improved health and well being were the most significant impact. Evidence of increased employability is also demonstrated by the on-going employment of a number of the trainees by the social enterprise. The project on the Kensington Redevelopment has therefore provided a number of positive indicators that demonstrate the benefits that can accrue through social procurement. These benefits are at no commercial risk to the Director of Public 3 Housing and provide a platform for improved asset management whilst providing economic and social outcomes to individuals and the community. AMES works with new and recently arrived refugees and migrants in Victoria and, since 2002, has used social enterprises to explore ways to address the systemic unemployment issues experienced by many recently arrived refugees and migrants. AMES vision is ‘Full participation for all in a cohesive and diverse society’. AMES is an autonomous Adult Education Institute established by the Victorian State Government. Urban Communities provides place management services on the Kensington Redevelopment. Responsibilities include the procurement and management of all contracts pertaining to the Kensington Redevelopment and the management of public housing on the Redevelopment. Urban Communities is a not-for-profit organisation with a robust mechanism for reinvesting profit back into the community.

2 3

Refer Appendix CKC report March 2011 Public Housing is provided by the Department of Human Services


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SECTION 1 – INTRODUCTION 1.1

Preamble

Social services are traditionally considered a government responsibility and as such the delivery of social and support services are conducted in a public and regulated environment maintaining governance and standards. This regulated environment, although encouraged and supported by government, can be challenged when delivering support services in a competitive environment. The efficient use of resources and capital can be compromised particularly where there is an added aim to gain social value and promote community participation and integration. Urban Communities was established to provide on-site management and an integrated approach to public and private housing on the Kensington Housing Precinct (now the Kensington Redevelopment). Since its inception Urban Communities has sought to initiate the delivery of support and maintenance services to social housing in a manner that is community integrated, while being comparable and competitive with the private sector. Social procurement, being the process of an organisation choosing to purchase a service which will also provide a social outcome and where procurement refers to the purchasing process adopted by institutions or organisations, can be seen to accommodate this social agenda. A social enterprise can be defined as any for-profit or non-profit organisation that applies capitalistic strategies to achieving philanthropic goals. Social enterprises differ from commercial enterprises in that they do not aim to offer any benefit to their investors, except where they believe that doing so will ultimately further their capacity to realise their philanthropic goals. When social procurement is used to engage a social enterprise to deliver services traditionally delivered by the private sector in a housing estate environment this creates an opportunity to:

provide a platform for training that develops achievable and transferable skills

provide integration with the broader community outside of the social housing environment

promote a positive economic impact at a micro and macro level

impact on community and individual well-being

develop a long term business

address political objectives and responsibility



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Delivering an identifiable service with a social enterprise that has a commercial value and standards provides a measurable platform to evaluate the benefits of social procurement. This report reflects on the social enterprise established as part of the operation of the Kensington Housing Redevelopment as a case for social procurement.

1.2

Methodology

The evaluation set out to observe the delivery of a commercial cleaning contract by the MGC Kensington social enterprise as well as to evaluate any economic and social impacts of the enterprise. This report brings together the reviews, investigations and assessments undertaken during the evaluation. The methodology and the sections of the report are outlined below.

Operation and contract management This component of the evaluation reviewed the commercial conditions and contracts in place for the Repairs, Maintenance and Operation of the Kensington Redevelopment up to 2009 and compared those with the conditions and contracts in place during the first stage of the operation of the social enterprise. The review initially looked at the facility asset management structure and the contract used to manage services and explored capital savings that may be experienced through extended life cycle of the finishes that are cleaned by the enterprise.

Economic analysis The analysis of economic benefit has been extracted and summarised from the report prepared by Charter Keck Cramer: Cost-Benefit and Social Impact Assessments (March 2011). This analysis provided an economic benefit forecast using a theoretical model to forecast the key benefits and costs that could accrue from the project comparing the options of a contract delivered by a social enterprise and the status quo of contract delivery by a commercial company.


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The forecast acknowledged there are a range of readily measurable impacts as well as some impacts that are more difficult to measure. The economic approach endeavoured to understand the readily quantifiable impacts of the proposal considering economic benefits including:

employment creation (full-time, part-time, traineeships)

taxation

retail and other expenditure

wages

Social impact assessment The social impact assessment has been extracted from theoretical modeling prepared by Charter Keck Cramer and a Social Impact Assessment report prepared by AMES Research and Policy Unit titled: Social Impact Assessment Report (September 2011). In brief the indicators of the social impact of the enterprise used in both evaluations were:

enhanced housing and physical environment

increased employability of participants in the enterprise

increased pride and participation in the community

improved health and wellbeing

AMES approach to the evaluation of the MGC Kensington social enterprise was broadly informed by the principles of action research. The main method of collecting information for the evaluation was regular interviews with all parties involved in the MGC Kensington enterprise.

Risk review A table of identified risk and mitigation strategies was developed based on the experience derived from the delivery of the project.



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1.3

Statement of purpose and conditions

The purpose of this report is to record and report on, where possible, the financial and social impact of a social enterprise established using a commercial service contract and investment from the Australian Federal Government Jobs Fund as a case for social procurement. The report is a combined assessment of the social enterprise established as part of the operation of the Kensington Redevelopment – based on observations, management practices and benefits. The assessment/forecasts exclude any items or works noted as specifically excluded in the body of the report or in any attachments (refer Charter Keck Cramer Cost-Benefit and Social Impact Assessments, AMES Social Impact Assessment), unforeseen circumstances, contingency and management. Any inaccuracy in, or change to any of the facts, findings or assumptions made in our report of which you are aware, should be advised to us so that we can assess its significance and provide you with a revised commentary and recommendation if necessary.


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SECTION 2 – BACKGROUND 2.1

The Kensington Redevelopment

The Kensington Redevelopment is a 6.5 hectare site in the inner north west of Melbourne consisting of both public and private dwellings. The Kensington Public Housing Estate was identified as an area that would benefit from a shift to a mix of public and private homes – a change that would physically and socially integrate the estate back into the surrounding suburb of Kensington. The project design and delivery was focused on the redevelopment of existing assets whilst introducing a mixture of new product for both public and private use. The 4 redevelopment project was launched in 2002 and in 2010 there were 407 public and 402 private dwellings on the redevelopment. In 2008 Urban Communities signed a 5 + 5 year agreement with the Victorian Director of Housing to manage public housing on the Kensington Redevelopment. This is a significant shift in government policy and is the first time in Victoria that public housing tenancy management has been wholly integrated within a non-government organisation. In 2009 Urban Communities was registered as a Housing Provider under the Housing Act 1983. The Kensington Redevelopment is located in an inner Melbourne suburb bounded by Kensington Road, Derby Street, Ormond Street and Altona Street, Kensington. Figure 1: Kensington Redevelopment

4

407 public dwellings includes 15 affordable dwellings



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The final stage of the built form is currently underway and due to be complete in late 2011. The completed development will offer public and private housing in a mixture of towers, low rise, walk up and terraces. These residences will be accommodated in 25 buildings located on the site as follows. Figure 2: Public and private buildings Public Buildings 94 Ormond Street 100 Ormond Street

Refurbished 1970s 12 storey tower Newly constructed 2009 four level family block

56 Derby Street 78 Clifford Terrace 78 Altona Street 60 Altona Street

Refurbished 1970s 12 storey tower Built 2005, 7 storey tower, older persons’ accommodation Newly constructed 2008 walk up family block Newly constructed 2009 walk up family block

39 Kensington Road 63 Kensington Road 65 Kensington Road

Built 2004, 3 storey walk-up family block Built 2004, 3 storey walk-up family block Built 2005, 3 storey walk-up family block

Private Buildings 108 Altona Street 84-88 Altona Street

Newly constructed 2005 four level Newly constructed 2005 four level

68-72 Altona Street

Newly constructed 2008 three - eight levels

50-62 Altona Street 40 Altona Street 37 Kensington Road 50 Henry Street 60 Henry Street 80 Henry Street

Newly constructed 2009 three - eight levels Newly constructed 2009 four levels Newly constructed 2004 three levels Newly constructed 2004 three levels Newly constructed 2004 three levels Newly constructed 2004 three levels

Terrace buildings

Newly constructed 2004


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2.2

Stakeholders

The Magic Green Clean (MGC) Kensington social enterprise is a partnership between AMES and Urban Communities. Figure 3: Partnership model

The responsibilities of each party are best described by the expertise they bring to the partnership. AMES has experience in social enterprises and training and Urban Communities in public/social housing management.

Urban Communities Urban Communities evolved from a joint partnership between the Victorian State Government and Becton, the redevelopment property developer of the Kensington Public Housing Estate. Both parties sought on site (place) management and an integrated approach to public and private housing at Kensington. The concept of place management and the building of a community were considered to be as important as the built form. Urban Communities continue to manage the redevelopment public asset on behalf of the Department of Human Services (DHS) and manage the owners’ corporations on behalf of private property owners. Urban Communities works with government, business and community to create livable places while maximising the supply and quality of affordable housing for low-income households. Urban Communities is a not-for-profit with a “business mind” with a robust mechanism for reinvesting profit back into the community.

AMES AMES provides settlement, education and employment services to culturally and linguistically diverse (CALD) clients. AMES overarching vision is for full participation for all in a cohesive and diverse society. Key priorities include addressing clients’ immediate settlement needs and longer-term aspirations for living in Australia.



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AMES has used social enterprises to explore ways to address the systemic unemployment issues experienced by many new arrivals. AMES social enterprises are businesses which primarily provide training and employment opportunities to disadvantaged migrants and refugees. AMES currently has two enterprises, one providing catering and the other, Magic Green Clean (MGC), providing an environmentally friendly cleaning services and training in asset maintenance. MGC was expanded and used to provide cleaning services at Kensington.

Department of Human Services: Housing and Community Building Division The Department of Human Services (DHS) provides public and social housing and support for low income Victorians targeted to those most in need. The Kensington Redevelopment is one of the many properties in Melbourne where the DHS Housing and Community Building Division provides housing support. This development is managed by Urban Communities on their behalf.

Employees in the enterprise The enterprise employs up to ten staff at Kensington - a supervisor, skilled cleaners and a maximum of six trainees at any one time. The supervisor, an experienced cleaner, delivers on-the-job training for all the trainees as well as providing a high degree of social support. As well as the supervisor, two to three skilled cleaners are employed (depending on time fractions). Of the enterprise staff, the trainees are considered to be the stakeholders for the purposes of this report. MGC Kensington recruited the first five trainees from the public tenants living on the Kensington Redevelopment. All of the trainees had been out of full time, stable employment for long periods. Two had previous experience of cleaning, but had no associated qualifications.


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The following three phases show how the expertise is shared and responsibilities met in delivering a social outcome for this project. Figure 4: Governance structure



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2.3

The social enterprise business model

Financial model The financial model for this enterprise is built around the annual contract value for cleaning and grounds maintenance at Kensington. This annual contract value of approximately $350,000 pa provides the basis for employment of supervisors, cleaners and trainees. Supporting the delivery of the contract is the enterprise management team, Urban Communities facilities management team in addition to other establishment and business costs. By undertaking the role of Cleaning and Grounds Management contractor to the estate the Kensington project provided for the establishment of this business unit and enterprise, allowing for an initial two year operation offering employment and training opportunities for the local community of the Kensington Redevelopment. This role of ‘contractor’ is jointly managed by Urban Communities and AMES and delivered to the estate via Magic Green Clean (MGC), an AMES established cleaning social enterprise. Through the partnership between Urban Communities and AMES, MGC Kensington took on the cleaning contracts initially for 23 buildings on the redevelopment. This has now expanded to 25 buildings. The value of the contract works over the two year period is approximately $700,000. The enterprise was further supported by the successful joint application by AMES and Urban Communities for funding as part of the Australian Federal Government Jobs Fund Scheme in 2009 and training funds under an established program – the Victorian Training Guarantee. This funding/government investment represented $620,000 of a $1,500,000 operation and funded training, management and research. Figure 5: Enterprise budget


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The project budget as illustrated above (Figure 4) is a combination of four main sources of capital. 5

1.

Service Contract - budgeted provision for cleaning, for public & private tenants

2.

Training - trainee funding established under the Victorian Training Guarantee

3.

Support & Management – in-kind investment by AMES & Urban Communities

4.

Investment - seed capital established under Australian Federal Government Jobs Fund

This project provides a base to review the enterprise and its ability to deliver a cleaning service in commercial terms over a two year period as well as providing upskilling, training and employment for a group of public tenants on the Redevelopment. The partnership between Urban Communities and AMES operates under a Memorandum of Understanding held between the two parties and is further articulated in the DEEWR funding contract. The contract budget sets out amounts to be drawn against contract works, training funds, government investment funding and additional in-kind support provided by AMES and Urban Communities for the establishment phase of the enterprise. (Refer Figure 5: Enterprise budget). The combined budget provided nominal portions for establishment, contract management and administration with the majority of cost being for staffing (management and labour costs) to deliver the contract.

5

Contract works for public tenants funded by DHS and private tenants delivered through the Owners’ Corporation and managed by Urban Communities



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Figure 6: Breakdown of budget

Overall the budget reflected a commitment to and understanding of the operation by AMES and Urban Communities.

Future budgets Going forward the budget will be representative of the annual contract works and whatever training is adopted. The one-off establishment costs will not be incurred in future budgets.

Employment model The MGC Kensington social enterprise uses an Intermediate Labour Market model to provide training and employment for unemployed persons on the Kensington Redevelopment and provides a catalyst for creating social capital. The mix of skilled and unskilled labour is critical to the success of this ILM model. A core workforce of skilled staff ensures that the enterprise is able to deliver services to the standard required under the contract mitigating risk to stakeholders, whilst supporting the development of the trainee workforce. (Refer Risk Table in Section 5) The employment structure comprised:

Supervisor

Skilled Cleaners

Trainees


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Supervisor The supervisor is an experienced cleaner recruited to manage the cleaning and asset maintenance work, supervise the cleaning team and coordinate the on-the-job training for the trainees. In managing the trainees’ training and work schedules, the supervisor also provided social support for individual trainees.

Skilled cleaners As well as the supervisor, MGC employed three skilled cleaners. These cleaners answered directly to the supervisor and ensured that the enterprise was able to deliver to the required standards of the contract. They did not have a direct role in training and/or supervising the trainees.

Trainees The six trainees also answered directly to the supervisor and were assigned duties in different buildings on the Redevelopment. They received classroom training in the knowledge competencies of the Certificate III in Asset Maintenance on average once a week. As their skills increased individual trainees were given greater autonomy and some were employed on a casual basis to work hours in addition to their traineeships. This business model actively pursues growth whilst providing opportunities for transitioning trainees to on-going employment and opening up opportunities for new trainees. In this model, some trainees will remain as employees of the enterprise and others will move on to employment outside the enterprise.



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The following diagram identifies the opportunities enabled for those involved. Benefits are accrued throughout the process with the ultimate aim of a trainee being capable of gaining employment outside of the enterprise. Figure 7: Pathways to employment


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SECTION 3 – OPERATION AND CONTRACT MANAGEMENT 3.1

Repairs, maintenance and operation

Since starting the operation of the Kensington Redevelopment, facility operations have been delivered on behalf of Property Services6 and the Director of Public Housing (DHS). As the Redevelopment has evolved there has been a need to manage not only the needs of the established property assets but also the integration of the phased construction of the facility. This phasing has provided an opportunity to review asset management processes. Costs for the soft facilities management services historically have been in the order of $1.0M to $1.2M per annum with cleaning and grounds maintenance representing approximately 25 - 30% of that cost. The allocation between public and private is approximately 85%/15% respectively, representing services required. 2010 costs are represented in the following broad categories. Figure 8: Asset and facilities services

Urban Communities in consultation with Property Services have transitioned the delivery of asset and facility services, maintaining the available funding and using standard property services contracts and specifications. Services have generally been outsourced to specified contractors, individual service providers or commercial facilities management companies. Over time and with the growth of in-house management and staff, contracts have been let and managed directly by Urban Communities with some aspects of facilities management now being directly provided by Urban Communities staff.

6

Property Services are a division of DHS



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This approach to facilities management is a progressive view on in-house and out house contracting by maintaining only those services in house where there is a perceived efficiency, skill and ability to manage risk. This experience has allowed Urban Communities to contract the social enterprise with confidence that their facilities management team could ensure delivery of service to standard and for a known value.

3.2

Standard contracts

Standard contracts provided by Property Services and the Director of Public Housing have been adopted as the basis for managing service agreements for services providers. This form was executed both prior to adoption of the social enterprise and maintained with the social enterprise for cleaning and grounds maintenance. These contracts are designed to identify the parties, their obligations, terms and the administration of the contract. The contract is made up of the following documents.

General conditions of contract and form of agreement: This section provides the basis for agreement, defines the parties, makes reference to legislation and law, provides the framework for operating the agreement and provides for the terms and the execution. Appendix A: General requirements of contract: This document provides for the more specific details and administration of the contract. Appendix B: Specification: This document provides a description and expected performance measure for specific tasks. Appendix C: Tender response schedule: This document reflects the accepted tender. Appendix D: List of locations: This document provides a list of building addresses as a reference. Annexure 1: Cleaning scope of works: This document is in the form of a table describing the physical tasks and their frequencies. Generally the contracts make no provision for the enterprise structure, however additional assessment criteria has been incorporated.


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3.3

Specification and scope for cleaning

The cleaning specifications and scope are detailed in the contract and basically cover the type of facility to be cleaned ie high rise, walk up or grounds and the tasks. Each task is also further defined by frequency. The table below sets out the scope for high rise buildings. Figure 9: Scope of works (high rise buildings) Frequency

Material

HIGH RISE BUILDINGS External Entrance 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9

Offensive substances Empty rubbish bin Pick up and remove rubbish Remove posters and advertising Sweep & clean floors Wash walls and glass Mop tiled and concrete floors Machine scrub tiled and concrete floors Wash walls and ceilings

Ground Floor Foyers 2.1 Offensive substances 2.2 Pick up and remove rubbish 2.3 Sweep & clean floors 2.4 Wash & wipe furniture doors and letter boxes 2.5 Clean all glass both sides 2.6 Wash all walls and skirtings 2.7 Remove posters and advertising 2.8 Mop tiled and concrete floors 2.9 Remove all rubbish from FHR 2.10 Machine scrub vinyl floors 2.11 Machine scrub ceramic floors 2.12 Wash walls and ceilings 2.13 Clean light diffuses

Daily M-S Daily M-S Daily M-S

Bins

Daily M-S Daily M-S Daily M-S Daily M-S

Glass Tiles

Monthly

Painted

Daily M-S Daily M-S Daily M-S Daily M-S Daily M-S Daily M-S Daily M-S Daily M-S Monthly Monthly Monthly Quarterly Quarterly

Letter boxes

Skirtings

FHR Vinyl Tiles Paint Diffusers

Sweep and clean Dust and clean light fittings Wash all walls Clean glass Remove all rubbish from FHR Wipe clean all stair railings Mop all landings, treads and risers

Carpeted Areas 4.1 Vacuum carpet remove stains

1.1 1.2 1.3 1.4

Wipe benches & tables Wipe cupboard and fridge doors Remove marks stains from walls Dust window frames and fittings

Daily M-S Daily M-S Daily M-S Daily M-S

1.5 1.6 1.7

Sweep floor Empty bins replace bin liners Mop with germicidal detergent

Daily M-S Daily M-S Daily M-S

Hall Meeting Areas 2.1 Dust window frames and fittings 2.2 Sweep floor 2.3 Empty bins replace bin liners 2.4 Mop with germicidal detergent 2.5 Vacuum carpet 2.6 Remove carpet stains

Toilets 3.1 Remove all rubbish 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10

Stairwells and Landings 3.1 Remove all rubbish 3.2 3.3 3.4 3.5 3.6 3.7 3.8

Frequency

Material

COMMUNITY FACILITIES Kitchen

Lights Painted Glass FHR Handrails

Carpet

3.11 3.12

Bins

Finish Bins Carpet

Daily M-S

Empty rubbish bin Dust fixtures and fittings Brush & clean toilet bowls Wipe cisterns and seats and lids Brush and clean urinals Remove stains marks and substances from all surfaces Clean mirrors Brush clean and polish all taps Clean hand basins with germicidal detergent Replace toilet rolls Clean mop frequently

Generally to Facilities 4.1 Clean all glass both sides 4.2 Machine scrub vinyl floors

6.1 6.2 6.3

Joinery Joinery Painted

Clean blinds Remove marks from walls Steam clean carpet

Daily M-S Daily M-S Daily M-S Daily M-S Daily M-S Daily M-S

Bins Joinery Fixtures Fixtures Fixtures Paint Mirrors Taps

Fixtures

Glass Vinyl

Blind Paint Carpet

Figure 9 should be read in conjunction with Section 3.5 Life Cycle Implications.



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3.4

Review of costs

The contracted amounts for the delivery of cleaning and grounds maintenance have been negotiated at comparable value to that previously contracted for comparable works specification. These rates, based on area and buildings, have been used to vary the contract amount as additional facilities have become available. The table below provides an indication of the contracted costs. Costs shown in this table represent a one year contract, whereas the enterprise will initially span two years. The actual amounts of previous contracts are not disclosed for commercial reasons. Figure 10: Contract costs (per annum) MGC Cleaning and Grounds Services 2009 - 2010 Cleaning

Grounds maintenance

Total

% Total

PRIVATE BUILDINGS 108 Altona St

Newly constructed 2005 four level

484.38

182.33

8,000.53

2%

84-88 Altona St

Newly constructed 2005 four level

1,453.13

158.40

19,338.37

5%

68-72 Altona St

Newly constructed 2008 3-8 levels

2,647.94

273.40

35,056.04

10%

50-62 Altona St

Newly constructed 2008 3-8 levels

910.96

91.16

12,025.48

3%

40 Altona St

Newly constructed 2009 4 level

519.87

91.16

7,332.34

2%

37 Kensington Rd


225.75

91.16

3,802.90

1%

50 Henry St


262.49

91.16

4,243.86

1%

60 Henry St


262.49

91.16

4,243.86

1%

80 Henry St


262.49

91.16

4,243.86

1%

Terrace buildings

Newly constructed 2004

0.00

273.48

3,281.80

1%

7,029.50

1,434.58

84,354.05

17,214.98

Sub Total Public annual cost


0% 101,569.03

29%

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MGC Cleaning and Grounds Services 2009 - 2010 Cleaning

Grounds maintenance

Total

% total

4,836.09

1,152.53

71,863.42

20%

519.87

91.16

7,332.34

2%

PUBLIC BUILDINGS

94 Ormond St

12 storey high rise housing building of 107 apartments (61 x 1 bedroom and 46 x bedsit) with a common ground floor community hall and sunroom. Built in early 1970s, new plant upgrade in late 1990s, last upgrade completed in 2004.

100 Ormond St

Constructed in 2010, a walk-up housing building containing 12 dwellings.

56 Derby St

12 storey high rise housing building of 117 apartments (3 x 3 bedroom, 63 x 2 bedroom and 51 x 1 bedroom) with a common ground floor milk bar. Built in early 1970s, new plant installed in late 1990s, last upgrade completed in 2004

4,836.09

1,094.95

71,172.43

20%

78 Clifford Terrace

Built in 2008, is a 7 storey high rise public housing building of 97 apartments (17 x 2 bedroom and 79 x 1 bedroom and ground floor community room).

5,608.33

373.13

71,777.56

20%

78 Altona St

Built in 2008, a 3 storey walk up housing building

312.09

207.90

6,239.92

2%

60 Altona St

Built in 2009, a 3 storey walk up housing building

391.10

91.16

5,787.07

2%

39 Kensington Rd

Built in 2004, a 3 storey walk up public housing building of 9 family apartments, with a common access core to the internal, with covered parking to the rear.

285.83

198.07

5,806.84

2%

63 Kensington Rd

Built in 2004, a 3 storey walk up housing building of 11 apartments, with a common access core to the internal, with covered parking to the rear.

285.83

110.57

4,756.75

1%

65 Kensington Rd

Built in 2005, a 3 storey walk-up housing building of 11 apartments, as a stand-alone building with a common access core and on ground parking to the rear.

273.93

198.07

5,664.06

2%

17,349.16

3,517.54

208,189.87

42,210.50

250,400.38

71%

24,378.66

4,952.12

292,543.92

59,425.49

Sub Total Public annual cost

Total Monthly Cost Summary Total Annual Cost (per service) TOTAL COST


351,969.41


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3.5

Life cycle implications

Maintaining and or extending the useful life of assets in a high density housing estate setting can provide for a more efficient use and management of capital. The useful life of assets is affected by a number of factors that at some point will determine asset obsolescence. An asset will generally be considered obsolete when it can no longer perform its intended function in the manner in which it is intended. Functions for obsolescence can generally be considered under the following four categories. Figure 11: Determinants of life of assets

Initially useful lives are set by the selection of materials and products in design and construction, however ensuring the intended design life is maximised will be determined by maintenance, use and function. Assuming that function, technical suitability and compliance have been maximised during the selection process, physical degradation can be prolonged by proactive maintenance including cleaning. The replacement of finishes, fixtures and fittings in high density housing estate settings is most likely to occur when the installed product is no longer in a maintainable state and/or able to perform its function. The finishes, fixtures and fittings nominated in the cleaning scope of works at Kensington and their estimated respective useful lives are as follows.


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Figure 12: Estimated life of assets at Kensington Finishes Carpet

Fixtures 7 years

Blinds

7 years

Concrete

15 years

Fixtures

15–20 years

Glass

20 years

Handrails

30 years

Painted

5 years

Joinery

15–20 years

Skirtings

15 years

Letter boxes

15–20 years

Tiles

20 years

Mirrors

15–20 years

Vinyl

18 years

Fittings

Grounds

Taps

20 years

Enclosure

30 years

Diffusers

15 years

Bins

10 years

FHR

15 years

Garden

5 Years

Appliances

7 years

Lights

15 years

Based on an assessment of the quantity of these finishes, fixtures and fittings at Kensington a forecast of the replacement of these assets based on their respective useful lives provides the following capital expenditure forecast. Figure 13: Capital cost forecast



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This forecast over a 15 year period equates to approximately $2.6M. However if each of the useful lives were extended by an average of 1-3 years the forecast would be reduced by approximately 11% or a total of $2.3M. This can be represented as follows. Figure 14: Capital cost forecast over 15 years Capital cost forecast over 15 years

% from base

Base

2,628,324

0%

1 year delay

2,437,797

7%

2 year delay

2,313,143

12%

3 year delay

2,276,759

13%

Average

2,342,566

11%

Although there is no proof of association with the social enterprise, the approach to the cleaning process observed by the asset manager suggests that a more preventative approach to maintenance is being practiced. Compared to previous contracts care over the cleaning and reporting has been heightened.


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SECTION 4 – ECONOMIC ANALYSIS This discussion is compiled and extracted from the following document: Cost-Benefit and Social Impact Assessments (Prepared by Charter Keck Cramer for Urban Communities and AMES) March 2011 This document provides an economic benefit forecast. The document is attached and forms part of this report. This study uses two different but complementary approaches/methodologies to understanding/measuring the varying impacts of the establishment of a social enterprise. The first approach endeavours to understand the readily quantifiable economic impacts while the second approach seeks to understand those impacts which are not as readily quantifiable. The primary objective of the economic analysis is to prepare an assessment of the various impacts arising from the expansion of Magic Green Clean – an existing social enterprise. The expansion of MGC will result in the provision of jobs and training for long term unemployed people living on the Kensington Redevelopment. The approach taken in the assessment to understanding the potential impacts of the project is to understand and measure the key benefits and costs that could accrue were the cleaning services to be procured using:

Option 1 (Status Quo Scenario) – delivered without a social enterprise

Option 2 (Social Enterprise) – delivered with a social enterprise

There are a range of readily measurable impacts as well as some impacts that are more difficult to measure. The study does not undertake financial accounting analysis to assess the profitability or otherwise of the project. This is outside the scope of the exercise. Due to the complexity and number of variables that can be considered, the analysis is necessarily high-level and is intended to provide a broad indication of benefits and costs. Moreover, due to the time-frame being analysed (20 years), the final results will be influenced by factors (social, technological, etc.) which are difficult to forecast. The economic evaluation used a cost benefit approach.



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4.1

Cost benefit

The cost benefit analysis evaluated a net forecast over a base case or business as usual position considering the economic impacts of wages, unemployment benefits, income taxation, property taxation and retail expenditure flows stemming from Option 2 (delivery by a social enterprise) over a 20 year horizon. The greater community benefit generated in Option 2 is driven mainly by the increase in employment and associated increases in taxation, after-tax incomes and retail expenditure. This appraisal demonstrated on a net present value basis that the funding would be returned to government and the economy both from taxation and stimulus multiple times over during the 20 year forecast period. Although the appraisal is for the project as funded, many of the returns are generated as a result of longer term effects of employment. The results of the cost benefit analysis are shown below. Further detail on assumptions and cash flows are contained in the attached report. Figure 15: Cost benefit analysis summary SUMMARY NPV Total Wages

Option 2

Option 1

Ratio of Options (2/1)

Difference in Options (2-1) ($)

$12,408,829

$1,997,354

6

$10,411,475

$9,990,907

$488,218

20

$9,502,689

$71,908

$71,390

1.0

$518

$10,062,816

$49,980

201

$10,012,836

Unemployment Benefits Savings

$4,940,359

$0

0.0

$4,940,359

Total Direct Retail Expenditure

$4,793,944

$1,700,969

3

$3,092,975

$10,762,405

$1,694,904

6

$10,762,405

Start-Up Funding (Federal Govt Jobs Fund Program) - Option 2 only

-$620,500

$0

na

-$620,500

State Government Training Subsidies - Option 2 only

-$429,087

$0

$0

-$429,087

-$1,049,587

$0

na

-$1,049,587

69

6

11

63

Total Income Taxation Total Property Taxation Total Taxation

Multiplier Expenditure (Indirect - from Direct Retail)

Total Govt Investment (Fed. & State Govt) - Option 2 only Employment / Traineeships (full-time / part-time, traineeships) SOURCE: Various including Charter Keck Cramer (2011)


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Total wages are an assessment of the wages accumulated over a 20 year period generated with or without the project. Taxation reflects the taxation generated directly and indirectly as a result of the wages earned. Expenditure forecasts are based on the direct and indirect result of wealth generated from the wages earned. The economic analysis suggests that, on a net present value basis over a 20 year analysis period, the project returns up to six times on total wages, twenty times on taxation revenue and six times on expenditure. Although all these measures are mutually exclusive it could be suggested that across the economic cost measures the project returns multiple times the original funding through higher wages, taxation revenue, retail and other expenditure.



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SECTION 5 – SOCIAL IMPACT ASSESSMENT The discussion in this section is compiled and extracted from the following documents: Cost-Benefit and Social Impact Assessments Prepared by Charter Keck Cramer, March 2011 Social Impact Assessment Prepared by AMES Research and Policy Unit, September 2011 The Cost-Benefit and Social Impact Assessments report is attached and forms part of this document. The Social Impact Assessment report describes the social outcomes achieved by the project. The report is also attached and forms part of this document. The social impact assessment study was undertaken to explore and understand the more difficult to measure social impacts of the social enterprise and to assess the social outcomes of MGC Kensington for the participating job trainees. It was also intended that the evaluation could provide some insights and recommendations that may contribute to the development and success of other similar enterprises. In describing the social return on investment that can be generated through social enterprises the social impact assessment contributes to the case for social procurement advocated in this report. The social impact assessment process took two approaches: 1.

It developed a theoretical model to measure the key benefits that could accrue were the cleaning services at the Kensington Redevelopment to be delivered by a social enterprise as compared to a commercial cleaning company.

2.

It undertook a qualitative evaluation through repeated interviewing of all staff in the social enterprise over an 18 month period – with a focus on understanding the impact of being employed as trainees on the long term unemployed job seekers.

The indicators used to evaluate whether the social enterprise had provided improved social outcomes (including employment for previously long term unemployed jobseekers) in both approaches were:


increased employability of trainees in the enterprise




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5.1

Theoretical modeling

Prior to delivery of the social enterprise traineeships The approach to a theoretical understanding the potential social impacts of the project is to measure the key benefits that could accrue were the cleaning services at the Kensington Redevelopment to be delivered by a social enterprise as compared to a commercial cleaning company. The two options can be described as follows:

Option 1 (Status Quo Scenario) – delivered without a social enterprise

Option 2 (Social Enterprise) – delivered with a social enterprise

In the following theoretical model (Figure 16), the two options are scored against the set of objectives based on the Victorian Government’s Neighbourhood Renewal Evaluation Framework. The scoring and forecasting was completed in March 2011 based on the expected outcomes of each option and therefore uses a combination of judgment and evidence accumulated to that point in time. (Refer to the attached Cost Benefit and Social Impact Assessments report (Charter Keck Cramer) for detail with respect to scoring and assumptions made.) Figure 16: Social impact assessment (March 2011) OBJECTIVE

Objective No.

SCENARIOS Option 1

Option 2

To enhance housing and the physical environment

1

2.0

6.7

To increase employment, training and education and expand the local economic activity

2

2.6

5.8

To increase pride and participation in the community

3

3.0

4.5

To promote health and well being

4

4.0

8.0

11.6

25.0

Total score Source: Charter Keck Cramer (2011)

On completion of the social enterprise traineeships In September 2011, after the completion of the first round of traineeships, the options were scored again. This rescoring took a slightly different approach to the original theoretical modeling and takes into account the actual number of disadvantaged job seekers employed under each scenario, as well as the qualitative evidence collected through the Social Impact Assessment interviews. In Option 1: Status Quo Scenario, the commercial cleaning company employed one public tenant. In Option 2: Social Enterprise Scenario, MGC Kensington employed six disadvantaged job seekers as trainees.



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The following scoring only takes into account the impact on these two groups of people who would otherwise have been unemployed (the public tenant in Option 1 and the six trainees in Option 2) and does not consider the social impacts of employment under either option for any other staff. This scoring also takes a different approach to measuring the first objective (To enhance housing and the physical environment) as impact against this objective is measured on a qualitative scale by the Asset Manager on the Kensington Redevelopment. This rescoring is represented in (Figure 17). Figure 17: Social impact assessment (September 2011) OBJECTIVE

Objective No.

SCENARIOS Option 1

Option 2


1

7.0

8.1

To increase employment, training & education and expand the local economic activity

2

1.7

6.0


3

1.7

4.3


4

Total score

1.7

7.7

12.1

25.9

Source: AMES (2011)

Objective 1: Quality of cleaning against contract as scored by the Urban Communities Asset Manager Objectives 2, 3, 4: Option 1 takes into account the benefit to the one public tenant and Option 2 weighs the benefits reported by the six disadvantaged job seekers employed by the social enterprise. The Option 1 score assumes the public tenant enjoyed full benefits from the job.

5.2

Qualitative evaluation of social impact

The findings of the social impact assessment evaluation demonstrated clear social benefits to public housing tenants and other disadvantaged job seekers as a result of the training, support and employment provided through the social enterprise. The most significant impact of being employed in the social enterprise for trainees is in terms of:

increased employability – demonstrated by the number of trainees being offered on-going employment in the social enterprise

improved health and well-being – as reported by all trainees

The quantitative results of the social impact assessment are fully described in the report Social Impact Assessment (AMES September 2011). A summary of the findings follows.


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Enhanced housing and the physical environment The social enterprise is providing an excellent cleaning service. This proposition is supported by management, staff and residents on the Redevelopment. Cleaning is of a better standard, attention to detail is better. [UC Asset Manager] I am proud of the standard we have at the site. [Skilled Cleaner] I’d like to commend [Trainee] for his utmost professionalism and patience with regard to his duties in my building. … [Resident]

Increased employability Trainees have all benefited from on the job training and have developed demonstrated cleaning and general employability skills. Four of the trainees have gained a credential in Asset Maintenance and, having completed their traineeships, three are now employed by the MGC social enterprise. One is also working confidently at another MGC site off the Kensington Redevelopment. [I feel] quite confident as a cleaner – with the basic skills. I’ve learned a lot better how to deal with people. I think I’m a lot better at team work as well. [Trainee] [I’d like to] get into further employment whether it be here or somewhere else. I’d like to further my education. [Trainee]

Increased pride and participation in the community Trainees express a sense of ‘ownership’ of the buildings they clean; however there is no clear evidence of increased social connectedness as a direct result of the project. There is evidence that workers/trainees are taking pride in their work. [UC Asset Manager] The people in the building tell me I’m doing things no one’s done before. I think they’re happy with the work here. I get to clean my own environment – who gets to do that? [Trainee]



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Improved health and wellbeing Trainees attributed a changed outlook to life to being employed; some report decreased depression and improved self esteem. Three want to gain full time employment and reduce their dependence on welfare. Having a job in the project has increased the confidence levels [pride in working] of some of the trainees. [UC Asset Manager] I feel better. [Before the traineeship] I was starting to feel depressed. It’s changed my whole outlook. It keeps me active. [Trainee] [I want] to get full time work as a cleaner. [Trainee]

5.3

Evidence from the interviews

The following table includes the sub-indicators used against each of the four indicators listed above and summarises the qualitative evidence of social impact for the trainees collected through a series of field interviews. The interviews were conducted between March 2010 and June 2011 and tracked the trainees through their traineeships and for several months after they had completed training. Figure 18: Qualitative evidence of social impact OBJECTIVE

OUTCOMES

1 To enhance housing and the physical environment

Improved upkeep, appearance of buildings

EVIDENCE

- Cleaning is of a better standard, attention to detail is better (Assessed by UC Asset Manager)

- Supervisor, skilled cleaners, trainees comment on higher standard of cleaning - Over the first year of the enterprise it became clear that employing the social

2

Less graffiti, vandalism

3

Property values

enterprise could not impact on the amount of graffiti. (As reported by UC Asset Manager). However UC Asset Manager commented on the quick response to cleaning up any graffiti

- Properties retain market value (Reported by UC) - Three trainees have completed assessment and gained Certificate III in Asset Maintenance

4

Training & qualifications

- One has completed training but has not been assessed in all units. Gained a Statement of Attainment

- One traineeship was extended; trainee left in mid 2011 due to ill health - One trainee left without completing the training

To increase employability

- Over the traineeships, trainees commented that they were developing new skills - cleaning and people skills - and that confidence was increasing 5

Skills developed

- At end of traineeships trainees generally felt confident as cleaners and commented on increased skill in dealing with people, patience, working in teams

- Skilled cleaners and supervisor also noted trainees’ skills development


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OBJECTIVE

OUTCOMES

EVIDENCE

- All trainees have training in a recognised qualification, work experience and access to referees

6

More personal capital; more choices for future work

- All express increased confidence in themselves - One trainee is confidently working off-site and has been given responsibility for supervising new trainees

- View expressed by both skilled cleaners and some trainees over duration of traineeships was that the trainees did not have the personal capital to find/retain employment in an unsupported work environment. However, observation by UC was that “trainees would underestimate themselves in terms of employability. Some trainees have moved significantly on the pathway to being employable.”

- At end of traineeships trainees were not actively seeking other employment but three were very keen to continue to be employed with the social enterprise at Kensington.

- Three trainees are now employed by the social enterprise on the Kensington 7

Employment

Redevelopment

- One trainee is also employed by MGC to clean an AMES site in Footscray and now prefers this work to working on the Redevelopment

- One trainee is doing voluntary work five days a week with a local community organisation

- Most trainees had only a very small financial benefit from working (this differed 8

More income earned

depending on what type of income support people receive), although three commented they were better off financially - One trainee (now employed) claims to be considerably better off financially through a combination of wages and pension

- Trainees and UC noted increased pride in the appearance of the Redevelopment

9 To increase pride and participation in the community

Traineeships create increased pride in the community environment

- Trainees and UC commented that trainees generally felt ownership of the maintenance/condition of the buildings they clean

- Residents have commented positively on the cleaners and good condition of the buildings

- 80% reduction in complaints about the condition of one of the public buildings (previously this building had a high number of complaints)

- Residents encourage others to move to Kensington – occupancy at 100% - No real increase in personal social connections reported by trainees as a result of being employed 10

Increased social connectedness

- Reports from skilled workers and residents indicate that trainees are connecting with the broader community of residents through their work

- Trainees continue to participate in events to a similar level of engagement as they did prior to the social enterprise Increased mental wellbeing

- All trainees commented on having a changed outlook because of the work - All commented on feeling better, having improved self regard and decreased

12

Increased personal status; less stigma

- Trainees were proud to be working - UC staff noted increased levels of confidence in some trainees

13

Changed attitude: less dependence on welfare

- Three trainees expressed the desire to obtain full time employment - One expressly aspired to cease receiving welfare

14

Increased physical wellbeing

- Some increase in physical wellbeing noted: two trainees commented on

11

To promote health and wellbeing


depression. They attributed this to working

improved physical health (early in the traineeships)


| 36

SECTION 6 – RISK 6.1

Evaluation of risk

Risks considered under the following four main categories have been identified as those most likely to impact on this project. No specific weighting is given to any category. The management structure and project preparation provided sufficient strategies to mitigate each risk identified. Figure 19: Risk mitigation strategy

Risk

1.0

Comment

Likelihood Impact (H) High (H) High (M) Medium (M) Medium (L) Low (L) Low

Mitigation Strategy

ENTERPRISE/BUSINESS STRUCTURE

1.1

AMES & Urban Communities unable to work together

Conflict between the delivery stakeholders - not aligned

1.2

Management resources

Adequate focus on management time is provided

(L)

1.3

Management support

Adequate additional resources required to assist management

1.4

Change management

1.6

Avoid

Planning & charter ensure this issue is managed

(H)

Mitigate

AMES & UC committed to seeing the project to completion and extended to business as usual

(M)

(M)

Avoid

Support resources made available

Change in approach to service delivery

(H)

(M)

Mitigate

Responsibility of steering committee

Number of trainees

Ratio of trainees to skilled staff

(M)

(M)

Mitigate

Supervision and management structure in place

1.8

Competition

Enterprise not being able to compete with commercial service providers

(H)

(M)

Avoid

Enterprise priced at commercial rates

1.9

Failure of enterprise to continue

Failure to maintain job security for employees

(M)

(H)

Mitigate

Meet contract requirements AMES & UC ensure insurer informed and adequate insurances in place as per contract

1.10 Insurance

2.0

Perception by insurer that enterprise poses above normal risk

(L)

(H)

(L)

(H)

Mitigate

FINANCE/VIABILITY ECONOMIC IMPACT

2.1

Under-costing to deliver service

Deficit incurred

(M)

(M)

Avoid

Staff experienced in costing

2.2

Financial management

Deficit incurred

(M)

(M)

Avoid

Staff experienced in managing budgets

2.3

Inflation/Cost

Providing for inflationary cost

(L)

(L)

Mitigate Underpinned by project budget


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Risk

Comment

Likelihood Impact (H) High (H) High (M) Medium (M) Medium (L) Low (L) Low

Mitigation Strategy

3.0

OPERATION & CONTRACT MANAGEMENT

3.1

Enterprise may not Enterprise offering is not attract sufficient attractive to the resource labour pool or not communicated

(L)

(H)

Mitigate

3.2

Resources unskilled and unable to deliver comparative professional service

Resources selected are not suitable for training or performing tasks

(H)

(H)

Mitigate AMES selection process

3.3

Loss of interest & focus

Unable to maintain focus and interest in project

(L)

(M)

Avoid

Commitment of management and staff of AMES and UC

3.4

Loss of key personnel

Turnover of staff with unique skill and experience with enterprise

(H)

(M)

Mitigate

Conditions of employment, recognition and support

3.5

Workplace health and safety

Effect of work place injury/exposure to legislation

(L)

(M)

Avoid

Ensure safe workplace/compliance with legislation

3.6

Equipment selection

Equipment purchased not suitable

(L)

(M)

Mitigate

Experienced staff select equipment

3.7

Equipment failure

Effect of equipment failure

(M)

(L)

Operations can hire replacement Mitigate and reliance on equipment is minimal

3.8

Communication

Poor communication resulting in lack of clarity about roles

(H)

(M)

Management and operational Mitigate staff maintain communication channels

3.9

Breach of contract

Enterprise breaches service agreement

(L)

(H)

Avoid

Clear communication between UC and AMES

Enterprise fails to deliver to service specification

(M)

(M)

Mitigate

Training and strong operational leadership

(L)

(H)

Mitigate

Residents surveyed to monitor satisfaction

3.10 Specification 4.0

Experience of enterprise working with target employees

STAKEHOLDER AND COMMUNITY

4.1

Enterprise may not Service delivery meet the needs of compromised by the the residents enterprise

4.2

Publicity

Effects of adverse publicity interfere with operation

(M)

(H)

Close monitoring by UC on Mitigate ground and by the steering committee

4.3

Enterprise Resentment of residents to acceptance by the the enterprise community

(L)

(H)

Avoid


The general community are aware of the Kensington policy and aims


Cost Benefit and Social Impact Assessments

Prepared by Charter Keck Cramer March 2011

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CONTENTS SUMMARY OF MAIN FINDINGS ....................................................................................... 41 Objective ........................................................................................................... 41 Methodology ..................................................................................................... 41 Results .............................................................................................................. 41 INTRODUCTION ............................................................................................................... 43 Objectives ......................................................................................................... 43 Methodology / scope ......................................................................................... 43 BACKGROUND ................................................................................................................. 45 Project description ............................................................................................ 45 Project context / key drivers .............................................................................. 46 COST BENEFIT ANALYSIS ............................................................................................... 52 Methodology ..................................................................................................... 52 Assumptions ..................................................................................................... 52 Results .............................................................................................................. 54 Sensitivity analysis ............................................................................................ 55 SOCIAL IMPACT ASSESSMENT ...................................................................................... 56 Methodology ..................................................................................................... 56 Key results ........................................................................................................ 57 Logic map ......................................................................................................... 60 APPENDIX A ..................................................................................................................... 61

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SUMMARY OF MAIN FINDINGS Objective The primary objective of the work is to prepare an assessment of the various impacts arising from the expansion of Magic Green Clean (MGC Co) – an existing social enterprise – through funding from the Federal Government Jobs Fund program (‘the project’). The expansion of MGC Co will result in the provision of jobs and training for long term unemployed people living on the Kensington Redevelopment in the north west of Melbourne.

Methodology The key to understanding the potential impacts of the project is to measure the key benefits and costs that could accrue were the project to be funded (Option 2 – Intervention Scenario in this report) versus were it to be not funded (Option 1 – Status Quo). There are a range of readily measurable impacts as well as some impacts that are more difficult to measure. Therefore, this study uses two different but complementary approaches/methodologies to understanding/measuring the varying benefits/costs across the two options. The first approach endeavours to understand the readily quantifiable impacts of the project while the second approach seeks to understand impacts which are not as readily quantifiable. The study undertakes this analysis using two types of assessments:

Task 1: Cost Benefit Assessment (CBA): The various economic benefits under each option are measured; and

Task 2: Social Impact Assessment (SIA): The SIA explores the more difficult to measure impacts of the two options.

Due to the complexity and number of variables that can be considered, the analysis is necessarily high-level and is only intended to provide a broad indication of benefits and costs. Moreover, due to the timeframe being analysed (20 years), the final results will be influenced by various factors (social, technological, etc) which are difficult to forecast. As such, the results need to be interpreted as a guide of what may occur given certain assumptions.

Results The results of the CBA are shown below. There are various benefits under Option 2 which are greater than those under Option 1 including:

wages

income taxation

property taxation

retail expenditure and associated flow-through expenditure (due to the multiplier effect of the retail expenditure)


COST BENEFIT AND SOCIAL IMPACT ASSESSMENTS

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Figure 20: Cost benefit analysis summary SUMMARY NPV



6

$10,411,475

Option 2

Option 1

$12,408,829

$1,997,354

$9,990,907

$488,218

20

$9,502,689

$71,908

$71,390

1.0

$518

$10,062,816

$49,980

201

$10,012,836


$4,940,359

$0

0.0

$4,940,359


$4,793,944

$1,700,969

3

$3,092,975

$10,762,405

$1,694,904

6

$10,762,405

-$620,500

$0

na

-$620,500

Total Wages

Total Income Taxation Total Property Taxation Total Taxation

Multiplier Expenditure (Indirect - from Direct Retail) Start-Up Funding (Fed Govt Jobs Fund Program) - Option 2 only State Government Training Subsidies - Option 2 only Total Govt Investment (Fed & State Govt) - Option 2 only

-$429,087

$0

$0

-$429,087

-$1,049,587

$0

na

-$1,049,587

69

6

11

63

Employment / Traineeships (full-time / part-time, traineeships) SOURCE: various including Charter Keck Cramer (2011)

The greater community benefit generated in Option 2 is driven mainly by the increase in employment and associated increases in taxation, after-tax incomes and retail expenditure. The key results of the SIA are provided overleaf. The objectives by which the options are rated are based on guidelines issued by the Victorian Government in its Neighbourhood Renewal program. Figure 21: Social impact assessment (March 2011) OBJECTIVE

Objective No.

SCENARIOS


1

Option 1 2.0


2

2.6

Option 2 6.7 5.8


3

3.0

4.5


4

4.0

8.0

11.6

25.0

Total score Source: Charter Keck Cramer (2011)

Option 2 produces a greater net community benefit for each of the objectives and a greater total score. It is noted that the scoring above is based on the expected outcomes of each option and is therefore based on a combination of judgment and evidence accumulated to date. It is envisaged that the options will be scored again once the project is complete and further evidence has been accumulated. The results of the CBA and SIA need to be interpreted with care. These evaluation frameworks are necessarily high-level and abstract from some key variables which, although difficult to measure, are very important in the medium-long term (for example the lifetime social and other costs of underemployment).

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INTRODUCTION Objectives The primary objective of the work is to prepare an assessment of the various impacts arising from the expansion of Magic Green Clean (MGC Co) – an existing social enterprise – through funding from the Federal Government Jobs Fund program (‘the project’). The expansion of MGC Co will result in the provision of jobs and training for long term unemployed people living on the Kensington Redevelopment in the north west of Melbourne. There are various secondary purposes of evaluating the program:

To understand what works in developing social enterprises and to assist in best practice implementation. This could include informing and improving current and future social enterprise cleaning (and other) businesses and knowing whether and how to replicate or grow social enterprise businesses

To understand the value and broader benefits for Adult Multicultural Education Services (AMES), Urban Communities and Government

To enable, promote and maximize opportunities for disadvantaged individuals and communities

Methodology / scope The key to understanding the potential impacts of the project is to understand and measure the key benefits and costs that could accrue were the project to be funded (Option 2 – Intervention Scenario in this report) versus were it to be not funded (Option 1 – Status Quo). There are a range of readily measurable impacts as well as some impacts that are more difficult to measure. This study uses two different but complementary approaches/methodologies to understanding/measuring the varying impacts across the two options. The first approach endeavours to understand the readily quantifiable impacts of the proposal while the second approach seeks to understand those impacts which are not as readily quantifiable. It is noted that:

The study does not undertake financial/accounting analysis to assess the profitability or otherwise of the project. This is outside the scope of the exercise; and

Due to the complexity and number of variables that can be considered, the analysis is necessarily high-level and is intended to provide a broad indication of benefits and costs. Moreover, due to the timeframe being analysed (20 years), the final results will be influenced by factors (social, technological, etc) which are difficult to forecast.



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The two respective tasks of the study are discussed below.

Task 1: Cost Benefit Assessment The various economic benefits under each option are measured including:

employment creation (full-time, part-time, traineeships, etc)

taxation

retail and other expenditure

wages

Task 2: Social Impact Assessment A Social Impact Assessment (SIA) study is conducted to explore and understand the more difficult to measure economic, social and environmental impacts of the two scenarios. The two options are scored against a set of objectives based on the Victorian Government’s Neighbourhood Renewal objectives. These are to:

enhance housing and the physical environment

lift employment, training and education and expand local economic activity

increase people's pride and participation in the community

promote health and well being

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BACKGROUND Project description The study involves analysis of a program providing jobs and training for the long-term unemployed living on the Kensington Redevelopment in the north west of Melbourne. The program involves the expansion of an existing social enterprise with training and employment which will target local communities, mainly public housing tenants on the Kensington Redevelopment. Magic Green Clean (MGC Co) is a small established social enterprise based in South East Melbourne. MGC Co provides an environmentally friendly cleaning service and training in Asset Maintenance. The project would see the expansion of the enterprise developing it into a commercially viable social business able to operate in a competitive market and compete for government contracts. The current proposal includes funding from the Jobs Fund to set up MCG Co in Kensington. Urban Communities would provide a cleaning and grounds maintenance contract for the Kensington redevelopment (450 public and 450 private properties). The key features of the project include:

redeployment of an existing service obligation

the outcome to be provided must be the minimum (at least) that a private firm can provide

the cost base of the project is capped which includes an initial capital injection (seed capital)

designed for the ultimate long-term benefit of the Kensington Redevelopment precinct

must be sustainable

cleaning and grounds maintenance of Kensington Redevelopment which includes 3 high-rise and 19 walk up blocks and 6.5 hectares of grounds

some of the participants are newly arrived people from Culturally and Linguistically Diverse (CALD) communities

workers/trainees recruited from the Kensington Redevelopment and the broader local community if necessary; trainees will be placed in other employment at completion of traineeships

trainees will receive work experience and training in Asset Maintenance and Occupational Health and Safety (OHS)

a monthly review by Urban Communities Asset Manager

It is considered that there are additional known growth opportunities for the social business beyond the funding period including:

seeking contracts with Government agencies/bodies, housing associations and property management groups

winning the contract for the Kensington Redevelopment

contracts for AMES in various South East Melbourne locations including in Noble Park, Dandenong and Springvale



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The above is only a summary of the immediate and known opportunities. It is possible that other prospects than those above may be capitalised upon in the future. Project funding will be used to establish MGC Co in the Kensington Public/Private Redevelopment. Among other purposes, funding will be used to employ:

industry experts/procurement managers to scope growth opportunities, to develop a Social Procurement Framework for government and to prepare assessments of the various economic, social and environmental impacts arising from the expansion of MGC Co. The industry expert/procurement manager will also develop a model for successfully growing a social enterprise into a commercially viable social business.

a Social Enterprise Development Manager to manage the traineeships, training and work experience and to establish networks for potential future contracts.

a Building Maintenance Supervisor and a Cleaning Supervisor with the skills and experience to supervise and mentor trainees who may have multiple barriers to employment.

Funding will also be used as establishment capital for the acquisition of essential cleaning and maintenance equipment and storage facilities.

Project context / key drivers There are a range of key context/key drivers which influence the nature, impact and success of the project. These are discussed below.

Stakeholders There are a range of stakeholders with both common and different requirements. Stakeholders are defined as those individuals and groups that may experience change arising from the project (excluding workers/trainees and clients). A description of key (current and potential) stakeholders and their key goals/objectives is discussed below: Figure 22: Key stakeholders Stakeholder

Description and Key Goals/ Objectives

Urban Communities

Urban Communities works with government, business and community to create great places to live and maximise the supply and quality of affordable housing for low-income households. Urban Communities began in the redevelopment of the Kensington Public Housing Estate which was identified as an area that would benefit from a shift to a mix of public and private homes and a physical and social integration of the Estate back into the surrounding suburb of Kensington. The Redevelopment project was launched in 2002. Urban Communities evolved from a joint partnership between the Victorian State Government and Becton, the redevelopment property developer. Both parties sought on site (place) management and an integrated approach to public and private housing at Kensington. The concept of place management and the building of a community were considered as important as the built form. In 2008, Urban Communities signed an agreement with the Victorian Government to manage public housing on the Kensington Redevelopment. This was the first time in Victoria public housing tenancy management has been wholly integrated within a non-government organisation.

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Stakeholder

Description and Key Goals/ Objectives Urban Communities is a not for profit organisation but uses business principles to reinvest profit back into the community. It also assists people by providing a wide range of services, creating places to live and facilitating partnerships within communities. Urban Communities core beliefs include: a physical build needs to be supported by a community build a central hub or conduit is important for discussion and action across all aspects of physical and community development and place management Urban Communities believes it is best placed to pilot and document a best practice ‘place management model’ Urban Communities believes in increasing opportunity for disadvantaged communities Urban Communities believes it is necessary to improve urban environments in order to promote community integration and participation Urban Communities believes in enhancing the social, environmental and economic sustainability of our neighbourhoods

Magic Green Clean Co (MGC Co)

MGC Co is a small established social enterprise based in South East Melbourne. MGC Co provides an environmentally friendly cleaning service and training in asset maintenance.

AMES

AMES provides settlement, education and employment services to culturally and linguistically diverse (CALD) clients. The overarching vision of AMES is for full participation for all in a cohesive and diverse society. Key priorities include: aiming to understand clients’ immediate settlement needs and longer-term aspirations for living in Australia being responsible for developing and shaping AMES services to best meet these aspirations; at the same time, AMES looks to expanding and strengthening partnerships with government, business and the wider community to achieve the best outcomes for clients involving Victoria’s many culturally diverse communities in developing and delivering services

SOURCE: various including organisation Annual Reports and websites



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Government policy on unemployment A range of Government programs, including the Jobs Fund program, are aimed at maximising job and training opportunities for the unemployed or the under-employed. These policies are driven by a range of objectives including social/equality drivers (ensuring everyone has the opportunity to work) and demographic drivers (an ageing population requires a higher proportion of workers to the overall population to fund services, pensions, etc for retirees). The Jobs Fund program is, however, specifically aimed at maximising job and training opportunities in local communities. It is a discretionary grants program with funding being available in the form of one-off grants of up to $2 million to support the delivery of innovative projects that maximise job and training opportunities in local communities. The program also aims to deliver positive environmental, heritage and social outcomes. Long-term unemployment is also an area of focus for the Jobs Fund program. There are various schools of thought regarding the best way to reduce long-term unemployment. One approach involves direct subsidies to firms to employ the long term unemployed (for example the US Job Openings and Labor Turnover Survey (JOLTS) program) while another is through direct subsidies to the long-term unemployed. Other approaches are based on the premise that specific programs do not really work and that the best policy is to build a fast growth economy. The 2010 Australian Federal Government election campaign highlighted the importance of reducing long-term unemployment with both parties forwarding various proposals including:

paying long-term unemployed people to relocate to take up a job and paying employers to employ the long-term unemployed who have relocated

paying relocation allowances (as per the above), but also paying young unemployed people additional cash payments (job commitment bonuses) if they remain in work and off welfare for two years

It is noted that reducing long-term unemployment through social enterprises (such as the current example) does not appear to feature prominently in policy thinking. However the current project – and other similar projects – may help to shed more light on this as a policy option especially as the broader benefits of social enterprises are better understood. Another related, but often neglected, phenomenon is that of under-employment. Under-employment may be defined as employed people working fewer hours than they 7 would prefer. Under-employment has increased over the last two decades being driven by a range of factors including the rise of part-time employment relative to fulltime employment. Under-employment, however, affects both those that are full-time and part-time employed. The under-employed can be especially vulnerable in times of 8 economic downturns as occurred recently with the Global Financial Crisis (GFC). The issue of under-employment has received less attention by policy makers than unemployment in recent years but is steadily gaining more attention.

7

http://www.abs.gov.au/ausstats/[email protected]/Latestproducts/1367.2Feature%20Article1Dec%202010?opendocum ent&tabname=Summary&prodno=1367.2&issue=Dec%202010&num=&view= 8 http://www.australiaatwork.org.au/documents/Australia%20at%20work%20In%20a%20Changing%20World.pdf

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Social procurement Social procurement may be defined as: “the process of an organisation choosing to purchase a service which will also provide a social outcome ... (where) procurement refers to the purchasing process adopted by 9 institutions or organisations.” Social procurement is an increasingly important policy tool for governments and other organisations around the world in achieving social outcomes such as reducing inequality, 10 increasing economic opportunities and protecting the environment. However, the impacts of social procurement programs are often not well understood. This can lead to:

programs not being initiated

programs being constrained or poorly targeted when implemented

sub-optimal economic, social and environmental outcomes

government and other funding not being used effectively

The key to ensuring this does not occur is developing a better understanding of how social procurement works, its benefits and how they can be maximised.

Non-Profit Institutions (NPIs) / Third Sector The organisations involved in the current study can be classified into a category of organisations known as non-profit institutions (NFPs) or, alternatively, the ‘Third Sector’ (being neither completely public nor private). These organisations are increasingly involved in social enterprises making an understanding of their operations critical. NFPs have been active in Australia for many years and have played a critical role in the nation’s development. NFPs are diverse and involved in a range of activities including, for example, service delivery, research and sport. While the work done by NFPs is not always recognised or recorded, the sector has become steadily more visible following recent work by the Australian Bureau of Statistics (ABS) and other organisations. Human service delivery is the most recognised aspect of NFPs work. This role has grown in recent years due to the involvement of NFPs in delivering government funded services. NFPs have a competitive advantage in this regard because of their strong ‘brand identity’ and the general perception they are accountable and can be trusted. NFPs are also involved in reducing social exclusion, a role for which the Federal Government has recognised the sector. The Federal Government is also increasingly collaborating with NFPs in order to achieve the goals of its social inclusion agenda. In particular, the Federal Government has noted: “...the (Australian Government's social inclusion) agenda recognises the critical role the non-profit sector plays in delivering services, advising and developing social policy, 9

http://www.socialtraders.com.au/sites/www.socialtraders.com.au/files/Building%20Social%20Enterprise%20thr ough%20Social%20Procurement.doc.pdf 10 Ibid SOCIAL ENTERPRISE: MAKING IT WORK


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and advocating on behalf of marginalised groups. A strong relationship between the government and the Sector will be crucial to the success of the agenda and related 11 reforms.” This recognition by Government is, in part, due to the size, reach and contribution of NFPs and their ability to marshal resources into opportunities and to address challenges. Australian Governments are not unique in seeking to better understand and strengthen NFPs. Various other countries are leading the push to increase the role, significance and impact of the NFP sector.12

Measuring impact Arguably, Australia lags behind comparable countries in seeking to understand its NFP sector and their activities. A consequence of this has been that the sector has not been well understood. This, however, is changing and the Australian Bureau of Statistics (ABS) and other organisations are now working towards building a knowledge base on the NFP sector. An example is the Centre for Social Impact (CSI). The CSI is a partnership between the business schools of the University of New South Wales, the University of Melbourne, Swinburne University of Technology and the University of Western Australia (WA) which aims to bring together philanthropic, not-for-profit, private and government players in pursuit of ‘social innovation.’ A key focus is on “socially responsible business management education and research.” In addition, several state government agencies are also working on better understanding the impact of impact measurement frameworks which can be used to assist in deciding on funding to NFPs and community based organisations. These include:

The NSW Department of Community Services and its adoption of the Results Based Accountability Framework; and

Strengthening Community Organisations Project (for the Victorian Government by the Allen Consulting Group).

A key driver of the push to better understand the impact of the NFPs is the growing realisation of the importance of non-economic/financial factors. This is especially the case in the current corporate environment where corporate social responsibility (CSR) has become increasingly widespread. A key example has been the growth in organisations adhering to the Equator Principles which are a set of voluntary standards designed to help banks identify and manage the social and environmental risks 13 associated with the direct financing of large infrastructure projects. Another driver for better information on NFP and their impacts is the call for greater accountability of NFPs by government, businesses, donors/philanthropists and other stakeholders. There are currently a number of approaches to measuring the impact of NFPs and their programs. In 2010 the Productivity Commission completed a major study into the contribution of the NFP sector. The study proposed a measurement framework for the collection of data, evaluation and reporting as shown by the following figure. 11 12 13

http://www.cotaaustralia.org.au/e107_files/COTA_documents/news/150908.pdf A Guide to Social Return on Investment, UK Cabinet Office – Office of the Third Sector http://www.equator-principles.com/principles.shtml

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Figure 23: A framework for measuring the contribution of the NFP sector

SOURCE: Contribution of the Not-for-Profit Sector. Productivity Commission Research Report (January 2010)

One of the increasingly popular ways to measure the impact of NPFs (or indeed any socially based activity) is via the Social Return on Investment (SROI) methodology. The SROI methodology attempts to measure ‘social value’ and is based on various principals including:

social value must go beyond notions of monetary or financial value if the true value of social, economic and environmental benefits are to be captured

although ‘value’ (rather than money) is the desired outcome, the SROI methodology attempts to place a monetary value on benefits and costs; this is because money is the standard common unit



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COST BENEFIT ANALYSIS Methodology The quantitative element of the cost benefit assessment (CBA) considers a range of variables which can be quantified including wages, taxation, expenditure and employment. To aid the analysis the CBA model has been kept simple with few variables. This is also due to the judgement that the variables analysed provide the majority of the benefits and that the variables which have been included are all relatively well quantifiable. Although more complex CBA models can be constructed the results of these models would be more open to dispute and subjectivity. The two scenarios are:

Option 1 (Status Quo Scenario) – The current situation continues. This involves a private firm providing cleaning services under the Government’s Public Tenants Employment Program (PTEP).

Option 2 (Intervention Scenario) – MGC Co is expanded via funding from the Federal Government Jobs Fund program aiming to provide jobs and training for long term unemployed people living on the Kensington Redevelopment in the north west of Melbourne.

Assumptions The key assumptions are shown in Figure 5 below. Figure 24: Key assumptions Variable

Assumption

Employment

Short-term positions include trainees. Full-time positions include: Industry Expert / Procurement Manager Social Enterprise Development / Kensington Manager Building Maintenance Supervisor Cleaning Supervisor Grounds person Cleaners The trainees will be placed in other employment at the completion of traineeships. For ease of calculation and to be conservative, the model assumes that all trainees are employed at the end of their training placements in part-time employment.

Property market

A proportion of employees enter the property market after commencing employment.

Retail Expenditure

A proportion of after-tax income is spent on retail.

Inflation

Inflation is ignored for ease of modeling.

Income Tax

Based on ATO calculations.

Council Rates

Hume City Council residential rates are used.

Stamp Duty

Victorian State Government rates used.

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Variable

Assumption

Other taxes

Land taxes, payroll taxes, etc are not included for ease of calculation and simplicity. Were they included a higher taxation revenue base would result under both options but be greater in the case of Option 2.

Retail Economic Multiplier

Retail trade generates expenditure multiplier effects - a multiplier of 2.245 is used. This means that for each extra dollar of input through the retail industry, further expenditure of $2.245 is generated in the economy over time. 14

Cost of program

$700,000 is used. This includes funding of $682,550 plus any additional ancillary/miscellaneous costs which may arise. This recognises that there is an additional cost involved in setting up and maintaining the initial phases of the program. It is intended that AMES/Urban Communities support is phased out over time.

SOURCE: various including Charter Keck Cramer (2011)

Some variables and factors are excluded from the analysis for simplicity and/or because there is insufficient information and/or there is considerable uncertainly in placing a value. For example: It is known that there is a lifetime cost which accrues both to individuals and to society if early intervention fails to assist those in need (especially in the case of young people). Where someone who has been unemployed for a short period of time becomes longterm unemployed a significant cost is incurred to both the individual and to Government. For example, there is a loss of taxation income to Government and the generation of unemployment benefits which are costs to Government. It is difficult to make an assessment of what the lifetime cost would be where early intervention is not successful but most studies suggest the cost is high. Employed citizens can improve their skills and therefore increase their individual productivity. This will translate into higher wages for the individuals concerned and greater output at an aggregate level. The modelling does not take into account increased productivity and any increased wages and may therefore be conservative. The implications of the work/welfare trade-off (that is, lower unemployment benefits are paid out as incomes and taxation rise) are not considered explicitly in this study due to:

The complex interaction between the work and welfare systems and the difficulty in forecasting the exact implications of any trade-off. For example, an Australian study on welfare reform initiatives (which aimed to reduce long-term receipts of social security benefits through assistance, incentives and requirements policy levees) found “that welfare reform has delivered mixed results across a range of countries and that the story is complex, nuanced and 15

quite country-specific”;

14

There are also non-financial rewards which are gained from employment (especially where it entails a transition from unemployment/government funded welfare to work). It is considered that these non-financial rewards may be significant but are difficult to value and quantify.

http://www.fwa.gov.au/sites/afpc2006wagereview/submissions/NationalRetailAssociationSubmission2006.pdf

15

Welfare Reform in Australia: An Evidence-Based Approach. Paper presented to the National Social Policy Conference, July 9-11 2003. University of New South Wales, by Pamela Kinnear, Graeme Grant and Ken Oliver. Commonwealth Dept. of Family and Community Services, Australia SOCIAL ENTERPRISE: MAKING IT WORK


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The social enterprise could involve additional measures to ensure that any disincentive effects (via the combination of reduced unemployment benefits and increased taxation) are reduced or negated.

The life time of assets may be longer under Option 2 due to (possibly) better cleaning service provided by the Social Enterprise. However, it is difficult to quantify these impacts.

Valuing the ‘in kind’ assistance from AMES/Urban Communities staff and others is difficult to do and therefore excluded. For example, extra support can be provided to the project that is not factored into the cleaning contract budget.

Results The results of the CBA are shown overleaf. There are various benefits from Option 2 which are greater than those resulting from Option 1. These include:

wages

income taxation

property taxation

retail expenditure and associated flow-through expenditure into the economy (due to the multiplier effect of the retail expenditure)

It is noted that the CBA can use various measures as the summary of all benefits. For example:

employment, after-tax income, retail/flow-through expenditure

taxation alone (income and property taxation for Government)

Regardless of which measure is used as the summary of all benefits, the net benefit (after taking into account the initial cost of project) is greater in Option 2 than in Option 1. The greatest net community benefit generated in Option 2 is driven, chiefly, by the increase in employment and the associated increase in taxation/retail expenditure. Appendix A shows the complete workings of the analysis.

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Figure 25: Cost benefit analysis summary SUMMARY NPV Total Wages

Total Income Taxation Total Property Taxation Total Taxation Unemployment Benefits Savings Total Direct Retail Expenditure



Option 2

Option 1

$12,408,829

$1,997,354

6

$10,411,475

$9,990,907

$488,218

20

$9,502,689

$71,908

$71,390

1.0

$518

$10,062,816

$49,980

201

$10,012,836

$4,940,359

$0

0.0

$4,940,359

$4,793,944

$1,700,969

3

$3,092,975

$10,762,405

$1,694,904

6

$10,762,405

Start-Up Funding (Fed Govt Jobs Fund Program) - Option 2 only

-$620,500

$0

na

-$620,500


-$429,087

$0

$0

-$429,087

-$1,049,587

$0

na

-$1,049,587

69

6

11

63


Total Govt Investment (Fed & State Govt) - Option 2 only Employment / Traineeships (full-time / part-time, traineeships) SOURCE: various including Charter Keck Cramer (2011)

Sensitivity analysis Were the number of annual trainees to be reduced from 3 to 1 - by way of example the CBA would result in the outcome as shown in the figure below. Of note is the difference in monetary benefits and reduction in employment. Figure 26: Cost benefit analysis summary – sensitivity SUMMARY NPV



Option 2

Option 1

Total Wages

$7,096,955

$1,997,354

4

$5,099,601

Total Income Taxation

$4,980,638

$488,218

10

$4,492,420

$71,908

$71,390

1.0

$518

Total Taxation

$5,052,546

$49,980

101

$5,002,566


$1,646,786

$0

0.0

$1,646,786


$2,741,790

$761,033

4

$1,980,757


$6,155,319

$1,694,904

4

$4,460,415

Start-Up Funding (Fed Govt Jobs Fund Program) - Option 2 only

-$620,500

$0

na

-$620,500


-$429,087

$0

$0

-$429,087

-$1,049,587

$0

na

-$1,049,587

27

6

4

21

Total Property Taxation

Total Govt Investment (Fed & State Govt) - Option 2 only Employment / Traineeships (full-time / part-time, traineeships) SOURCE: various including Charter Keck Cramer (2011)



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SOCIAL IMPACT ASSESSMENT Methodology The Social Impact Assessment (SIA) assesses the more difficult to measure impacts of various options. The SIA can be used when:

a range of variables cannot be valued

an additional qualitative discussion is needed due to limited information or insufficient research about the value of impacts

The indicators selected have been based on the objectives of the Victorian Government’s Neighbourhood Renewal Evaluation Framework (NREF). The NREF objectives are to:

increase people's pride and participation in the community;

lift employment, training and education and expand local economic activity;

enhance housing and the physical environment;

improve personal safety and reduce crime;

promote health and wellbeing; and

increase access to transport and other key services and improve government responsiveness

It is noted that Neighbourhood Renewal is a whole-of-government community building initiative to narrow the gap between the most disadvantaged neighbourhoods in Victoria and the rest of the State. The indicators used in the current study, however, are not exactly the same as the NREF indicators. This is because not all of the NREF indicators are relevant. The indicators used in the current study are to:

enhance housing and the physical environment;

lift employment, training and education and expand local economic activity;

increase people's pride and participation in the community; and

promote health and well-being.

There are various ways to score the respective options. It has been agreed to use a 110 type system which is easy to understand. In the current round, the consultant has scored the different options. In future rounds of the exercise – once the program has been operating for some time – the impacts can be rated by AMES, Urban Communities and other stakeholders.

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Key results It is found that Option 2 has the greater community benefit compared to Option 1. This is due to higher scores on all indicators. Figure 27: Social impact assessment OBJECTIVE

Objective No.

SCENARIOS Option 1

Option 2


1

2.0

6.7


2

2.6

5.8


3

3.0

4.5


4

4.0

8.0

11.6

25.0

Total score Source: various including Charter Keck Cramer (2011)

The detailed results are shown in the figures overleaf and can be summarised as follows:

an improvement in the built and physical environment through greater care taken with cleaning and maintenance services (provided by the residents themselves). This increases ‘ownership’ of the Redevelopment and the services provided and has a beneficial impact including reduction of graffiti/vandalism and an increase in residents’ perception of the Redevelopment as a good place to live

an increase in employment and training which expands local economic activity

an increase in people's pride and participation in the community through work and greater social interaction

an increase in mental and physical health and wellbeing through the beneficial impacts of employment, including on attitudes, self-perception and personal relationships



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Figure 28: SIA - housing and the physical environment Objective

Scenarios

Indicator No

Indicator

1

Improved upkeep, appearance of grounds and buildings

2

7

UC Asset Manager: appearance of estate environment (KPIs) improved against previous contractor - AMES Project Manager notes this - Residents notice this - Supervisor/full-time workers/trainees comment on improved appearance of estate environment

2

Less graffiti and vandalism

2

7

UC Asset Manager, residents, supervisor note this

3

Property values

2

6

UC rates housing stock at increased value

2.0

6.7


Sub-Total

Comments

Option 1 Option 2

SOURCE: Charter Keck Cramer (2011)

Figure 29: SIA – employment, training and education and expanded local economic activity Objective

To lift employment, training and education and expand local economic activity

Indicator No

Indicator

4

More income

5

More personal capital, more choices for future work

Scenarios Option 1 Option 2 3

3

Comments

7

Trainees say their income increases due to training/work

7

Trainees indicate that they have more employment resources and choices due to the program. These include: - Qualifications & work experience/history - Confidence at interview - References

6

Employability

3

5

Trainees demonstrate employability skills through: - Performance on the job - Attitude to work & to training - Retention (completion of traineeships; resignations; etc)

7

Skills developed

2

5

Trainees: - Complete cleaning traineeship - Gain cleaning skills

8

Employment

2

5

2.6

5.8

Sub-Total SOURCE: Charter Keck Cramer (2011)

Trainees have a job and gain other employment post-traineeship

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Figure 30: SIA – pride and participation in the community Objective

Indicator No 9

To increase pride and participation in the community 10

Scenarios

Indicator

Comments

Option 1 Option 2


5

Trainees comment on increased pride in the neighborhood UC Asset Manager, AMES Project Manager, supervisor/full-time workers comment on this Residents see the Redevelopment as a good place to live

2

4

Trainees comment on making new social connections as a result of working with: - Other workers - Family/friends - Increased social linking across the workplace is occurring with all workers - Increased participation in events on the Redevelopment by trainees

3.0

4.5

4

Increased social connectedness

Sub-Total SOURCE: Charter Keck Cramer (2011)

Figure 31: SIA – promote health and wellbeing Objective

Indicator No

Indicator

Scenarios Option 1 Option 2

Comments

11

Increased mental wellbeing

2

4

Trainees comment on having a sense of purpose Trainees comment on having less depression and/or feeling more positive about their lives as a result of this job Increased connection with family and improved personal relationships

12

Traineeship increases personal status and reduces stigma

2

4

Trainees spontaneously say that having a job increases their personal status or reduces perceived stigma

Sub-Total

4.0

8.0

TOTAL

11.6

25.0


SOURCE: Charter Keck Cramer (2011)



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Logic map One way to consider the benefits and outcomes of the Social Enterprise is via a logic map. Figure 32: SIA logic map (MGC Kensington - a social enterprise partnership)

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APPENDIX A Figure 33: Cost benefit analysis - Option 2 Option 2 ANNUAL YEAR

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 27.0 36

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 30.0 39

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 33.0 42

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 36.0 45

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 39.0 48

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 42.0 51

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 45.0 54

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 48.0 57

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 51.0 60

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 54.0 63

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 57.0 66

0 3 $350,000

0 3 $350,000

1 4 $350,000

0 4 $350,000

0 4 $350,000

0 4 $350,000

0 4 $350,000

0 4 $350,000

1 5 $350,000

1 6 $350,000

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

General Parameters Year Industry Expert / Procurement Manager Social Enterprise Development / Kensington Manager Building Maintenance Supervisor (0.5) Cleaning Superviser Grounds Person Cleaners Trainer and training costs Trainees Graduated Trainees (Cumulative impact) Total

2010

2011

2012

2013

2014

2015

2016

2017

0.5 1.0 0.5 1.0 1.0 4.0 0.1 3.0 0 11

0.5 1.0 0.5 1.0 1.0 4.0 0.1 3.0 3.0 14

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 6.0 15

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 9.0 18

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 12.0 21

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 15.0 24

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 18.0 27

0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 21.0 30

2018 Employment 0.0 0.2 0.0 1.0 1.0 4.0 0.1 3.0 24.0 33

Property Market Assumptions Purchase of property Ownership Median House Price

0 0 1.0 0.0 0 1 0 0 0 1 1 1 2 2 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000

0 2 $350,000

0 2 $350,000

1 3 $350,000

Retail Market Assumptions Retail Expenditure / Proportion of Income

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%




| 62

Figure 34: Cost benefit analysis - Option 2 Benefit Cost Analysis Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $870,912 $1,255,240

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $967,680 $1,352,008

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $1,064,448 $1,448,776

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $1,161,216 $1,545,544

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $1,257,984 $1,642,312

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $1,354,752 $1,739,080

2025

2026

2027

2028

2029

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $1,741,824 $2,126,152

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $1,838,592 $2,222,920

Benefits ($m) Economic Wages Industry Expert / Procurement Manager $70,000 Social Enterprise Development / Kensington Manager$70,000 Building Maintenance Supervisor (0.5) $27,000 Cleaning Superviser $65,000 Grounds Person $33,146 Cleaners $132,582 Trainer and training costs $39,600 Trainees $100,000 Graduated Trainees (Cumulative impact) $0 Total Wages $537,328 Taxation, Rates and Charges Income Taxation Industry Expert / Procurement Manager $14,550 Social Enterprise Development / Kensington Manager$14,550 Building Maintenance Supervisor (0.5) $3,150 Cleaning Superviser $13,350 Grounds Person $33,146 Cleaners $19,080 Trainer and training costs $0 Trainees $0 Graduated Trainees (Cumulative impact) $0 Total Income Taxation $97,826 Property Taxes Stamp Duty $0 Council Rates $0.0 Total Property Taxation $0 Total Taxation $97,826

$70,000 $70,000 $27,000 $65,000 $33,146 $132,582 $39,600 $100,000 $96,768 $634,096

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $193,536 $577,864

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $290,304 $674,632

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $387,072 $771,400

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $483,840 $868,168

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $580,608 $964,936

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $677,376 $1,061,704

$0.0 $14,000 $0 $65,000 $33,146 $132,582 $39,600 $100,000 $774,144 $1,158,472

$0.0 $0.0 $0.0 $14,000 $14,000 $14,000 $0 $0 $0 $65,000 $65,000 $65,000 $33,146 $33,146 $33,146 $132,582 $132,582 $132,582 $39,600 $39,600 $39,600 $100,000 $100,000 $100,000 $1,451,520 $1,548,288 $1,645,056 $1,835,848 $1,932,616 $2,029,384

$14,550 $95,333 $95,333 $95,333 $14,550 $2,910 $2,910 $2,910 $3,150 $184,504 $276,756 $369,009 $13,350 $13,350 $13,350 $13,350 $33,146 $33,146 $33,146 $33,146 $19,080 $19,080 $19,080 $19,080 $0 $0 $0 $0 $0 $90,884 $90,884 $90,884 $0 $0 $0 $0 $97,826 $439,208 $531,460 $623,712

$95,333 $2,910 $461,261 $13,350 $33,146 $19,080 $0 $90,884 $0 $715,964

$95,333 $95,333 $2,910 $2,910 $553,513 $645,765 $13,350 $13,350 $33,146 $33,146 $19,080 $19,080 $0 $0 $90,884 $90,884 $0 $0 $808,216 $900,468

$95,333 $2,910 $738,017 $13,350 $33,146 $19,080 $0 $90,884 $0 $992,721

$95,333 $95,333 $95,333 $95,333 $95,333 $95,333 $95,333 $95,333 $95,333 $95,333 $95,333 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $830,269 $922,522 $1,014,774 $1,107,026 $1,199,278 $1,291,530 $1,383,782 $1,476,035 $1,568,287 $1,660,539 $1,752,791 $13,350 $13,350 $13,350 $13,350 $13,350 $13,350 $13,350 $13,350 $13,350 $13,350 $13,350 $33,146 $33,146 $33,146 $33,146 $33,146 $33,146 $33,146 $33,146 $33,146 $33,146 $33,146 $19,080 $19,080 $19,080 $19,080 $19,080 $19,080 $19,080 $19,080 $19,080 $19,080 $19,080 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $90,884 $90,884 $90,884 $90,884 $90,884 $90,884 $90,884 $90,884 $90,884 $90,884 $90,884 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,084,973 $1,177,225 $1,269,477 $1,361,729 $1,453,981 $1,546,234 $1,638,486 $1,730,738 $1,822,990 $1,915,242 $2,007,494

$0 $13,870 $0 $0 $13,870 $0 $0 $0.0 $1,283.1 $1,283.1 $1,283.1 $2,566.2 $2,566.2 $2,566.2 $0 $15,153 $1,283 $1,283 $16,436 $2,566 $2,566 $97,826 $454,361 $532,743 $624,995 $732,400 $810,782 $903,035

$0 $2,566.2 $2,566 $995,287

$13,870 $0 $0 $13,870 $0 $0 $0 $0 $0 $13,870 $13,870 $3,849.3 $3,849.3 $3,849.3 $5,132.4 $5,132.4 $5,132.4 $5,132.4 $5,132.4 $5,132.4 $6,415.5 $7,698.6 $17,719 $3,849 $3,849 $19,002 $5,132 $5,132 $5,132 $5,132 $5,132 $20,286 $21,569 $1,102,692 $1,181,074 $1,273,326 $1,380,732 $1,459,114 $1,551,366 $1,643,618 $1,735,870 $1,828,122 $1,935,528 $2,029,063

State Government Training Subsidies -$39,600 -$39,600 -$39,600 -$39,600 -$39,600 -$39,600 -$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

-$39,600

$60,000 $120,000 $180,000 $240,000 $300,000 $360,000 $420,000

$480,000

$540,000

$600,000

$660,000

$720,000

$780,000

$840,000

$900,000

$960,000 $1,020,000 $1,080,000 $1,140,000

$27,043 $27,043 $10,431 $25,112 $12,805 $51,221 $15,299 $38,633 $37,385 $244,972

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $299,078 $447,556

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $336,462 $484,941

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $373,847 $522,326

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $411,232 $559,710

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $448,616 $597,095

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $486,001 $634,480

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $523,386 $671,864

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $560,771 $709,249

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $598,155 $746,634

Unemployment Benefits Savings $0 Retail Expenditure Industry Expert / Procurement Manager $27,043 Social Enterprise Development / Kensington Manager$27,043 Building Maintenance Supervisor (0.5) $10,431 Cleaning Superviser $25,112 Grounds Person $12,805 Cleaners $51,221 Trainer and training costs $15,299 Trainees $38,633 Graduated Trainees (Cumulative impact) $0 Total Direct Retail Expenditure $207,588

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $74,769 $223,248

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $112,154 $260,633

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $149,539 $298,017

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $186,924 $335,402

$0 $0 $5,409 $5,409 $0 $0 $25,112 $25,112 $12,805 $12,805 $51,221 $51,221 $15,299 $15,299 $38,633 $38,633 $224,308 $261,693 $372,787 $410,171

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $635,540 $784,018

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $672,925 $821,403

$0 $5,409 $0 $25,112 $12,805 $51,221 $15,299 $38,633 $710,309 $858,788

Retail Multiplier Multiplier Expenditure (Indirect - from Direct Retail) $466,034 $549,963 $501,192 $585,120 $669,049 $752,978 $836,906 $920,835 $1,004,764 $1,088,692 $1,172,621 $1,256,550 $1,340,478 $1,424,407 $1,508,336 $1,592,264 $1,676,193 $1,760,122 $1,844,050 $1,927,979


| 63

Figure 35: Cost benefit analysis - Option 1 Option 1 ANNUAL YEAR

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

General Parameters Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

Employment Industry Expert / Procurement Manager (na) Social Enterprise Development etc (na) Building Maintenance Supervisor (na) Cleaning Superviser Grounds Person Cleaners Trainer and training costs Trainees Graduated Trainees (Cumulative impact) Contract Manager (Pickwick) Total

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

0.0 0.0 0.0 0.2 1.0 4.0 0.0 0.0 0.0 1.0 6.2

Property Market Assumptions Purchase of property Ownership Median House Price

0 0 1 0 0 1 0 0 0 1 0 0 1 0 0 0 1 0 0 1 0 0 1 1 1 2 2 2 2 3 3 3 4 4 4 4 5 5 5 6 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000

Retail Market Assumptions Retail Expenditure / Proportion of Income

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%

39%




39%

| 64

Figure 36: Cost benefit analysis - Option 1 Benefit Cost Analysis Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

Benefits ($m) Economic Wages Industry Expert / Procurement Manager (na) Social Enterprise Development etc (na) Building Maintenance Supervisor (na) Cleaning Superviser Grounds Person Cleaners Trainer and training costs Trainees Graduated Trainees (Cumulative impact) Contract Manager (Pickwick) Total Wages Taxation, Rates and Charges Income Taxation Industry Expert / Procurement Manager (na) Social Enterprise Development etc (na) Building Maintenance Supervisor (na) Cleaning Superviser Grounds Person Cleaners Graduated Trainees (Cumulative impact) Contract Manager (Pickwick) Total Income Taxation Property Taxes Stamp Duty Council Rates Total Property Taxation Total Taxation

$0.0 $0.0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $243,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0 $0.0 $13,000 $33,146 $132,582 $0 $0.0 $0.0 $65,000 $178,728

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$0.0 $0.0 $0.0 $13,350 $0.0

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$19,080 $0.0 $13,350 $45,780

$0 $0 $0 $45,780

$0 $0 $0 $45,780

$13,870 $1,283 $15,153 $60,933

$0 $1,283 $1,283 $47,063

$0 $1,283 $1,283 $47,063

$13,870 $2,566 $16,436 $62,216

$0 $2,566 $2,566 $48,346

$0 $2,566 $2,566 $48,346

$0 $2,566 $2,566 $48,346

$13,870 $3,849 $17,719 $63,499

$0 $3,849 $3,849 $49,629

$0 $3,849 $3,849 $49,629

$13,870 $5,132 $19,002 $64,782

$0 $5,132 $5,132 $50,912

$0 $5,132 $5,132 $50,912

$0 $5,132 $5,132 $50,912

$13,870 $6,416 $20,286 $66,066

$0 $6,416 $6,416 $52,196

$0 $6,416 $6,416 $52,196

$13,870 $7,699 $21,569 $67,349

na

na

na

na

na

na

na

na

na

na

na

na

na

na

na

na

na

na

na

na

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $94,160

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048

$0 $0 $0 $5,022 $12,805 $51,221 $0 $0 $25,112 $69,048


Retail Expenditure Industry Expert / Procurement Manager (na) Social Enterprise Development etc (na) Building Maintenance Supervisor (na) Cleaning Superviser Grounds Person Cleaners Trainees Graduated Trainees (Cumulative impact) Contract Manager (Pickwick) Total Direct Retail Expenditure Retail Multiplier


This report has been prepared for the exclusive use of the party to whom it is addressed and for no other purpose. No responsibility is accepted for any third party who may use or rely on the whole or any part of the content of this report. It should be noted that any subsequent amendments or changes in any form to this report would only be notified to and known by the parties to whom it is addressed. This report has been carefully prepared by Charter Keck Cramer Strategic Research, Melbourne and the information contained herein should not be relied upon to replace professional advice on specific matters. © 2011 (Charter Keck Cramer)



Social Impact Assessment Report

Prepared by AMES Research and Policy September 2011

ACKNOWLEDGEMENTS AMES Research and Policy would like to acknowledge the participation of those involved in the Magic Green Clean Kensington (MGC Kensington) social enterprise who contributed to this evaluation.

The MGC Kensington Cleaning Team

AMES Social Enterprise Unit

Staff at Urban Communities

Particular thanks to the MGC Kensington supervisor, cleaners and trainees for agreeing to be interviewed a number of times over the past two years and for their honest and open feedback on their experiences of the enterprise.

The set-up of the MGC Kensington social enterprise was supported by DEEWR

The Social Impact Assessment was funded by VicHealth

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CONTENTS EXECUTIVE SUMMARY ................................................................................................... 70 Background ................................................................................................................ 70 Outcomes in terms of social impact ............................................................................ 71 Business development................................................................................................ 72 INTRODUCTION ............................................................................................................... 73 What is a social enterprise?........................................................................................ 73 Purpose of this report ................................................................................................. 75 Methodology ............................................................................................................... 75 OVERVIEW: SETTING UP THE SOCIAL ENTERPRISE .................................................. 79 Kensington Redevelopment ........................................................................................ 79 Partnerships ............................................................................................................... 79 The Enterprise ............................................................................................................ 80 SOCIAL IMPACT ............................................................................................................... 84 Indicators of social impact .......................................................................................... 84 Social impact assessment .......................................................................................... 85 IMPACT OF THE SOCIAL ENTERPRISE ON INDIVIDUALS ............................................ 97 Trainee 1 ........................................................................................................... 97 Trainee 2 ........................................................................................................... 98 Trainee 5 ........................................................................................................... 99 Trainee 6 ......................................................................................................... 100 THE FUTURE OF MGC KENSINGTON .......................................................................... 101 MGC Kensington today ................................................................................... 101 Where to from here? ....................................................................................... 101 Business growth and employment outcomes for trainees ............................... 102


SOCIAL IMPACT ASSESSMENT REPORT

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EXECUTIVE SUMMARY Magic Green Clean Kensington is a social enterprise partnership between AMES and Urban Communities. AMES works with new and recently arrived refugees and migrants in Victoria and provides initial settlement, English language and vocational training and employment services to over 50,000 people a year. Since 2002 AMES has used social enterprises to explore ways of addressing the systemic unemployment issues experienced by many recently arrived refugees and migrants. AMES vision is ‘Full participation for all in a cohesive and diverse society’. Urban Communities provides place management services on the Kensington Redevelopment. Responsibilities include the procurement and management of all contracts pertaining to the Kensington Redevelopment and the management of public housing on the Redevelopment. Urban Communities is a not-for-profit with a ‘business mind’ and a robust mechanism for reinvesting profit back into the community. The overall objective of the Magic Green Clean Kensington social enterprise was to test whether social procurement of cleaning services at the Kensington Redevelopment could provide a cleaning service to the same standard as a commercial arrangement and deliver economic and social benefits for public housing tenants and other disadvantaged job seekers.

Background In late 2009 AMES and Urban Communities established the Magic Green Clean Kensington (MGC Kensington) social enterprise as an Intermediate Labour Market (ILM). The social enterprise is located on the Kensington Redevelopment, a public/private housing estate in Kensington in the inner north west of Melbourne. MGC Kensington originally took on the cleaning contracts for 23 buildings on the Redevelopment and now cleans 25 buildings. In 2010 the enterprise employed a supervisor, two to three skilled cleaners (depending on 16 time fractions) and six job seekers on traineeships , five of whom were unemployed public tenants living on the Redevelopment. In the ILM model some trainees may be employed by the enterprise itself as business expands – and this has been the case with MGC Kensington. In 2011 three of the 2010 trainees are employed on contracts, six new trainees have been engaged and three of these are also employed to work hours in addition to their traineeships.

16

The job seekers employed on traineeships are generally referred to as ‘the trainees’ throughout this report.

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MGC Kensington was established with the assistance of investment from the Department of Education, Employment and Workplace Relations (DEEWR) Jobs Fund leveraged off a commercial cleaning contract with Urban Communities.

Purpose of the social enterprise The primary purpose of MGC Kensington is to create social benefit for public housing tenants on the Redevelopment and other disadvantaged people through training, support and employment in the enterprise. The ultimate aim is to then assist participating trainees to transition into mainstream jobs. MGC Kensington was also established as a pilot to test the capacity of a social enterprise to provide a cleaning service that is as good as or better than a standard commercial arrangement. The broader purpose around this aspect of the enterprise is that of providing evidence to support a case for social procurement.

Objectives of the social impact assessment The Social Impact Assessment was undertaken to assess the social outcomes of MGC Kensington for the participating job trainees and, in a separate report, to provide some insights and recommendations that may contribute to the development and success of other similar enterprises. This report describes the social outcomes achieved by the enterprise with a view to providing evidence to government, public housing management and corporate employers of the social return on investment that can be generated through social enterprises.

Outcomes in terms of social impact The impact of engagement in the social enterprise on the trainees’ lives is described against four indicators:


increased employability



The most significant impact reported by the trainees is in terms of (i) increased employability and (ii) improved health and wellbeing. Evidence of increased employability is also demonstrated by the on-going employment of a number of the trainees by MGC Kensington. The following provides a summary of the evaluation findings.

Enhanced housing and physical environment Magic Green Clean Kensington has been assessed by the Urban Communities Asset Manager as providing an excellent cleaning service and all properties on the Kensington Redevelopment have retained market value.



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Increased employability All trainees have benefited from formal and on-the-job training. Four of the six original trainees have completed training and obtained a credential in Asset Maintenance (Cleaning). All have gained demonstrated cleaning skills and general employability skills for example dealing with people, working in teams, attending work regularly. At the completion of their traineeships, three trainees were employed by the social enterprise. All three are currently working on the Kensington Redevelopment and one of the three is also cleaning an AMES site in another suburb.

Increased pride and participation in the community Trainees clearly express pride in and a sense of ‘ownership’ of the buildings and areas of the Redevelopment that they clean. However there is no clear evidence of increased social connectedness as a direct result of the employment in the social enterprise.

Improved health and wellbeing All trainees attributed a changed outlook to life to being employed. Different trainees have reported feeling better, having improved self-regard and decreased depression. In terms of changed attitude three of the trainees have also expressed the desire to obtain full time employment and therefore become independent of welfare.

Business development MGC Kensington today Through making a case for social procurement to targeted not-for-profit and/or government funded organisations, the enterprise has expanded the business and is currently able to provide full-time and part-time contracts for three of the original trainees. It has also taken on a further six trainees, three of whom are now also employed on a casual basis in addition to their traineeships.

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INTRODUCTION AMES has been involved in the development of a number of social enterprises since 2002. These enterprises have largely been established as Intermediate Labour Markets (ILMs) with a focus on assisting migrants and refugees to gain the skills and experience they need to secure mainstream employment in Australia. The particular social enterprise that is the subject of this report, Magic Green Clean Kensington (MGC Kensington), differs from other enterprises established through AMES in that the majority of the participants are not from migrant or refugee backgrounds, but are public tenants at the Kensington Redevelopment which provides both public and private 17 housing. This report has been prepared by AMES Research and Policy Unit to explore the impact of the MGC Kensington social enterprise on the lives of the participating job seekers.

What is a social enterprise? There is considerable literature, and debate, on what constitutes a social enterprise. The 18 following descriptions of social enterprises from The Centre for Social Impact (CSI) and 19 Social Traders help provide a context for MGC Kensington and this social impact report. CSI aims to influence public policy, promote best practice in the social sector and demonstrate and measure social impact. In a 2009 paper written for the CSI, Social 20 Enterprise: A Powerful Path to Social Inclusion , Cheryl Kernot gives the following definition of social enterprises: Debate around definitions continues but is settling around key areas encapsulated in the definition proposed (2008) by Kim Alter founder of Virtue Ventures …: a social enterprise is “any business venture created for a social purpose – mitigating/reducing a social problem or a market failure – and to generate social value while operating with the financial discipline, innovation and determination of a private sector business”. [Alter, K. (2007). Social enterprise typology] Globally, a range of hybrid organisations have emerged to address a range of unmet social need either in specific places or with specific groups of disadvantaged peoples including the homeless, disabled, refugees, indigenous or unemployed. Within the spectrum of these hybrid organisations are social enterprises, those business ventures addressing social issues by generating profits through their market-focussed business activities.

17

The partnership with Urban Communities created a focus on employing people who lived in public housing on the Redevelopment. 18 http://www.csi.edu.au 19 http://www.socialtraders.com.au 20 Social Enterprise: A Powerful Path to Social Inclusion, Cheryl Kernot, June 2009, Centre for Social Impact



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Social Traders is an independent company based in Victoria and established to facilitate, support and advocate for the development of social enterprise in Australia. In their paper 21 Building social enterprise through social procurement Social Traders describe social enterprises as follows: There is no such thing as a typical social enterprise, they are organic and adopt different business and social models. Some are very commercial and resemble for-profit businesses in all areas except for their governance or profit distribution models. At the other end of the spectrum are social enterprises that are trading entities delivering significant social benefits, often more than those delivered through government funded programs. ... Social enterprises exist for a range of reasons, including: -

providing jobs for the long-term unemployed and those with disabilities retaining or providing needed goods and services achieving environmental benefits revenue raising for charitable organisations

AMES Magic Green Clean Co social enterprise AMES Magic Green Clean Co (MGC Co) is a social enterprise that operates as an Intermediate Labour Market (ILM) company. MGC Co undertakes commercial work in order to train, support and employ disadvantaged job seekers (usually recently arrived refugees and migrants) and then transition them into mainstream jobs. In the ILM model some trainees may be employed by the enterprise itself as business expands – and this has been the case with MGC Co. Magic Green Clean Kensington (MGC Kensington) was established in 2010 as a new arm of MGC Co. It too was established on the ILM model to provide training leading to employment for long-term unemployed public tenants living on the Kensington Redevelopment. It is an enterprise with a primary purpose of creating social value as described by Kernot through providing jobs for the long-term unemployed and retaining/providing needed goods and services - as described by Social Traders.

21

Building social enterprise through social procurement, Social Traders (accessed July 2011 from http://www.apo.org.au/research/building-social-enterprise-through-social-procurement)

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Purpose of this report This Social Impact Assessment was undertaken to document the social outcomes of the MGC Kensington social enterprise and to assess whether the social enterprise has provided improved social outcomes including increased possibilities of obtaining employment for trainees in the enterprise. The social impact assessment is not an evaluation of social enterprises generally, and while it may be possible to apply the findings from the evaluation more broadly, this report aims only to provide a realistic assessment of the social outcomes that were achieved for the participants in this social enterprise. A separate report, Establishing a Social Enterprise: lessons learned presents some recommendations for establishing successful social enterprises on the ILM model that came out of the evaluation. This report describes the social outcomes achieved by the enterprise and provides evidence to government, service providers, public housing management and corporate employers of the social return on investment that can be generated through social enterprises.

Methodology Our approach to the evaluation of the MGC Kensington social enterprise has been broadly informed by the principles of action research. Our main method of collecting information for the evaluation was through a series of interviews with all parties involved in the MGC Kensington enterprise. Following each phase of interviews we reflected on the issues raised and shared our thoughts and questions both within the AMES research team and with staff of the AMES Social Enterprise Unit. These reflections informed both the content of future interviews and some of the operations of the enterprise. Data for this evaluation was collected through:

regular interviews with staff members (trainees and skilled cleaners) of the MGC Kensington enterprise

regular meetings with staff of the AMES Social Enterprise Unit and Urban Communities

feedback from residents of the Kensington Redevelopment via the Public Housing Manager and the Manager Property and Project Services

Quotes from these interviews and meetings used in the following sections of this report are attributed as follows: Urban Communities [UC]; Skilled Cleaners [SC]; Trainees [T]; Residents [R]. The indicators of the social impact of the enterprise that the interviews were designed to explore focused on (i) an enhanced physical environment, (ii) employability, (iii) participation in the community and (iv) improved wellbeing.



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Interviews with MGC Kensington staff Interviews were conducted with all employees (trainees, skilled cleaning staff and the cleaning supervisor) of the MGC Kensington social enterprise at the beginning, middle and end of the 2010 traineeships. Interviews were again conducted in April and June 2011 with people who had completed the 2010 traineeships and were still employed in the enterprise. Exit interviews were offered to any trainees who left the enterprise whether or not they had completed their traineeship. Figure 37: Interview dates Interview 1 Interview 2 Interview 3 Interview 4 Interview 5

March - May 2010 (start traineeships) July 2010 (mid-traineeships) Nov - Dec 2010 (end traineeships) April 2011 (post-traineeships) June 2011 (post-traineeships)

Unique question sets were developed for the different groups within the cleaning enterprise. Interviews were structured with questions framed to capture information relating specifically to indicators of social impact. However the interviews were conducted in a fairly informal manner with the interviewer adopting a conversational style. Most interviews took 20-30 minutes. Interviews were voluntary. The enterprise employees (including trainees) were informed before interviews were set up that they were not required to participate. One 2010 trainee chose not to participate in an interview on two (of five) occasions. Staff members who agreed to be interviewed were reminded at the beginning of each interview that they were free not to respond to questions they did not wish to answer. Some skilled cleaners chose not to answer questions relating to the trainees. The interviews were confidential. Interviewees were informed that the notes taken during their interviews would be seen by the research project manager in the AMES Research and Policy Unit. Any feedback or quotations would be used anonymously. Given the small number of people working in the cleaning enterprise we have been aware that individuals’ privacy could be compromised and have endeavoured to protect the workers’ privacy. The 2010 trainees whose stories appear later in this report were given an opportunity to comment on these texts and have given their consent for their use.

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Interview questions Interviews with the trainees covered the following topics:

previous work experience

reasons for applying for the traineeship

experience of the traineeship – personal and professional

financial impact of the traineeship

views on the Magic Green Clean enterprise

plans for the future

Interviews with the skilled cleaners covered these topics:

knowledge of and views on the Magic Green Clean social enterprise

differences between commercial operations and social enterprises

appearance and condition of buildings

views on the trainees’ skills and attitudes

Interviews with the supervisor covered the following:

views on the trainees

differences between commercial operations and social enterprises

any issues arising in his role as supervisor

views on the enterprise model used at Kensington

Meetings with AMES Social Enterprise Unit and Urban Communities Meetings with AMES Social Enterprise Unit staff took place following each round of interviews with the cleaning team. Where interviewees had given their consent for issues to be passed on to the Social Enterprise Unit we did so. These issues related to work conditions, health and personal circumstances. We met with Urban Communities on a regular basis to discuss developments within the cleaning enterprise. As well as adding to the body of qualitative data, these meetings provided an opportunity to incorporate some action research principles in the evaluation and to provide feedback and recommendations to the social enterprise management staff. We also attended Steering Committee Meetings. Some of the reports tabled at these meetings by the AMES Social Enterprise Manager and Urban Communities management and staff contributed to this evaluation.



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Resident feedback Feedback from residents of the Kensington Redevelopment was provided by both the Public Housing Manager and the Manager Property and Project Services from Urban Communities. These managers work directly with tenants and deal with any complaints, or compliments, about the cleaning and maintenance of buildings, reports of graffiti on the Redevelopment and feedback on the cleaning staff. We met with the Public Housing Manager a number of times and with the Manager Property and Project Services to review residents’ feedback on the maintenance of the Redevelopment in the first part of 2011.

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OVERVIEW: SETTING UP THE SOCIAL ENTERPRISE Kensington Redevelopment The Kensington Redevelopment is a 6.5 hectare site in the inner north west of Melbourne consisting of both public and private dwellings. In 2010 there were 407 public/social residences and 402 private properties on the Redevelopment. The Kensington Redevelopment project was launched in 2002 and is the first major redevelopment in Victoria to revitalise a large inner city high-rise public housing estate. The State Government and the developers, Becton, shared a vision for the redevelopment that was the creation of a ‘vibrant, cosmopolitan and sustainable inner city living neighbourhood’. Both parties recognised that this would require specific attention to the building of a cohesive community with as little distinction as possible between public and private residents. The concept of place management was consequently embraced as being as important as the built form. Urban Communities initially provided on-site management of both the public and private housing for Becton and later entered into an agreement with the State of Victoria to provide place management services on the Kensington Redevelopment. In the evaluation one of the measures used was ‘pride and participation in the community’ as this was of particular relevance to the Kensington Redevelopment place managers.

Partnerships The MGC Kensington social enterprise is a partnership between AMES and Urban Communities. The partnership has brought together the expertise and resources of both organisations. AMES brings expertise in establishing and managing social enterprises, training and employment placement for disadvantaged Culturally and Linguistically Diverse (CALD) job seekers. Urban Communities brings expertise in place management services on the Kensington Redevelopment, implementing a significant shift in government policy in the management of public housing.

AMES AMES vision is Full participation for all in a cohesive and diverse society. AMES has worked for 60 years with new and recently arrived refugees and migrants to Victoria to ensure these new arrivals are well supported in their settlement so that they can participate in and contribute to Australia’s diverse society. AMES provides initial settlement, English language and vocational training and employment services to over 50,000 people a year. Since 2002 AMES has used social enterprises to explore ways to address the systemic unemployment issues experienced by many new arrivals. AMES social enterprises are businesses which primarily provide training and employment opportunities to disadvantaged migrants and refugees.



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AMES currently has two enterprises – one in catering and the other in cleaning. The principles AMES applies to these social enterprises are:

application of sound business practice to generate sustainable trading which serves as a basis for real workplace training

delivery of accredited training courses customised to suit participants’ learning needs, providing hands on learning, work based training and work experience

contribution to building inclusive communities through creating opportunities for actively engaging participants in work

AMES is an autonomous Adult Education Institution, accountable to the Victorian Minister for Skills and Workforce Participation.

Urban Communities Urban Communities began as a Becton owned on-site management company responsible for providing a combination of facilities management to public and private housing, body corporate management to private housing, an on-site office for Office of Housing (OOH) Housing Services Officers and a community building strategy. With government, corporate and community support, Urban Communities was incorporated as an independent not-forprofit organisation in 2007. In 2008 Urban Communities signed a 5+5 year agreement with the Victorian State to provide place management services on the Kensington Redevelopment. Under the agreement, Urban Communities’ responsibilities include the procurement and management of all contracts pertaining to the Kensington Redevelopment and the management of public housing located on the Redevelopment, while adhering to government policy and procedure. This model is unique in Victoria and is a significant shift in government policy. The awarding of the contract illustrates the Victorian State Government recognition of and commitment to a place management service system underpinned by community building principles. Urban Communities is a not-for-profit with a ‘business mind’ and a robust mechanism for reinvesting profit back into the community.

The Enterprise Setting up the MGC Kensington social enterprise The MGC Kensington social enterprise was established to provide training for long term unemployed people living on the Kensington Redevelopment. The enterprise targeted public housing tenants in particular as amongst public tenants there are high levels of disadvantage, with nearly 90% being on social security benefits or disability pensions according to Victorian State Government Office of Housing data.

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To set up the enterprise to provide cleaning and maintenance services on the Kensington Redevelopment AMES and Urban Communities leveraged the Urban Communities cleaning contract of just over $640,000 - approximately $300,000 for the first and just under $350,000 for the second year of the contract – to gain a $620,000 investment (over a two year period) from the 2009 DEEWR Jobs Fund. The Urban Communities cleaning contract guaranteed that over the 2009 – 2011 DEEWR Jobs Fund period MGC Kensington could create up to 12 traineeship positions as well as employing skilled cleaning staff and a supervisor to train and mentor the trainees. Some of the implications of using the DEEWR Jobs Fund as seed capital for the enterprise are explored further in a separate report - Establishing a Social Enterprise: lessons learned.

Key objectives of the MGC Kensington Social Enterprise The objectives of the social enterprise were to work with long term unemployed job seekers to:

establish a cleaning enterprise capable of providing high quality cleaning services

build capacity and skills (and therefore employability) within the community by providing jobs and training for residents who would otherwise be entirely welfare dependent

increase pride in the Redevelopment environment and participation in local events and with the local community

contribute to improved physical and mental wellbeing

As well as the social impacts on the long term unemployed job seekers engaged in the enterprise, it was anticipated that there would be flow on financial benefits to government which include a reduction in income support, health and justice costs - and therefore added value for money in contract delivery.

Structure The enterprise was established through the expansion of one of AMES existing social enterprises - Magic Green Clean (MGC Co). While the Kensington arm of the enterprise has operated as an independent business for the purposes of cleaning and maintaining the estate, AMES has provided systems support – as it does for all its social enterprises. AMES Social Enterprise Unit is responsible for the overall management of the social enterprises, and has the organisation’s resources to draw on - for example the existing HR and Payroll Units. Some implications of using established processes within a large organisation are discussed further Establishing a Social Enterprise: lessons learned.



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Recruitment of cleaning staff – including trainees The skilled cleaners, including the supervisor, were largely recruited from staff who had worked with the commercial company which had previously held the contracts for cleaning and maintenance of the Kensington Redevelopment. One skilled cleaner was employed under the Public Tenants Employment Program. Recruitment for the trainee positions was managed through AMES Human Resources and formal recruitment and application processes, including interviews, were followed.

Social Enterprise staff The enterprise employs ten staff at Kensington - a supervisor, two or three skilled cleaners (depending on time fractions the cleaners can work) and a maximum of six trainees at any one time.

The Supervisor The supervisor proved to be critical to the success of the enterprise. A very experienced cleaner, the supervisor delivered on-the-job training for all the trainees as well as providing a high degree of social support. The supervisor was originally recruited to manage the cleaning and asset maintenance work, supervise the cleaning team and coordinate the on-the-job training for the trainees. It was envisaged that social support would be provided in part by AMES, but largely by Urban Communities through their Public Tenancy Team and Community Development workers. However, as the trainees commenced work, it became clear that in managing their training and work schedules, the supervisor was also successfully supporting individual trainees who had, in some cases, multiple barriers to remaining in employment. The trainees consistently praised the supervisor and expressed strong appreciation of the training and support he provided. [Supervisor] has been a really good teacher. [T] [Supervisor is] very good. [T] I can tell [supervisor] anything. He fixes any problem. [T] Appreciate the way [supervisor] works. [T]

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The Skilled Cleaners As well as the supervisor, three skilled cleaners were employed. Although the cleaners did not have a direct role in training and/or supervising the trainees, they were in contact with them on a daily basis and were willing to work in a business that would employ a large (relative to its size) number of trainees.

The Trainees There were five suitable applicants from the public tenants living on the Kensington Redevelopment. All had had previous contact with Urban Communities Public Tenancy Team and Community Development workers, and some were already employed to do a few hours work with Urban Communities. The aim was to take on six trainees so one more traineeship was advertised more widely across AMES and a sixth trainee was employed three months after the first group had started. This trainee did not live on the Redevelopment or in other public housing, but is from a CALD background and had experienced many challenges in obtaining work. The group consisted of four males and two females with ages ranging between (roughly) 30 and 60. All of the trainees had been out of full time, stable employment for long periods. The majority had been unemployed for an average of four years, with one trainee having been unemployed for nearly eight years. Another had spent a prolonged period recovering from a major accident and so had not worked for some time. The trainees had had a range of very different work experiences prior to being unemployed. Some had considerable work histories and had held long term jobs in quite responsible positions. Others had histories of low skilled, casual/itinerant types of work. Two of the trainees had previous experience of cleaning, but had no associated qualifications. In terms of gaining employment, most of the trainees faced barriers other than long term unemployment. Some were dealing with a range of (in some cases, significant) barriers. Despite this, attendance on the job was very regular with most absences the result of regular appointments or the very occasional sick day.



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SOCIAL IMPACT Indicators of social impact The evaluation team developed a customised set of indicators for the social impact assessment. As described in the previous section, the objectives of the social enterprise were to work with long term unemployed people to:

develop a cleaning enterprise capable of providing high quality cleaning services

build employability skills within the community

reduce social isolation

contribute to improved mental and physical wellbeing

The four indicators used to evaluate the social impact on the trainees in the enterprise were:


increased employability of participants in the enterprise



Three of these indicators – those that focus on employability, participation in the community and wellbeing – will be transferable to assessing the social outcomes of many social enterprises. The indicator around an improved housing and physical environment is relevant here as MGC Kensington is a cleaning/maintenance enterprise and it is of direct interest to the place managers, Urban Communities, that: ‘improved appearance of the community environment and increased pride in homes and buildings contributes to reduction in property damage’.

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Social impact assessment The following table describes the measures used against each of the four indicators and summarizes the social impact of the enterprise for the trainees. Figure 3: Indicators & evidence of social impact OBJECTIVE

OUTCOMES

MEASURES

EVIDENCE

Improved upkeep, appearance of buildings

Urban Communities (UC) Asset Manager notes the appearance of Redevelopment environment (KPIs) is improved against previous contractor Improved appearance of the Redevelopment noted by: supervisor/skilled cleaners/trainees AMES Social Enterprise Manager, residents

Cleaning is of a better standard, attention to detail is better (assessed by UC Asset Manager)

Supervisor, skilled cleaners and trainees also comment on higher standard of cleaning

Over the first year of the enterprise it became clear that employing the social enterprise could not impact on the amount of graffiti (as reported by UC Asset Manager)

However UC Asset Manager commented on the quick response to cleaning up any graffiti

Properties retain market value (reported by UC)

Three trainees have completed assessment and gained Certificate III in Asset Maintenance

One has completed training but has not been assessed in all units. Gained a Statement of Attainment

One traineeship was extended; trainee left in mid-2011 due to ill health

One trainee left without completing the training

Over the duration of the traineeships, trainees commented that they were developing new skills - cleaning and people skills - and that confidence was increasing

At the end of their traineeships trainees generally felt confident as cleaners and commented on increased skill in dealing with people, patience, working in teams

Skilled cleaners and supervisor also noted trainees’ skills development by end of traineeships

To enhance housing and the physical environment Less graffiti, vandalism

Property values

Training & qualifications

UC Asset Manager, residents, supervisor note this

UC rates private housing stock as maintaining or increasing value

Trainees complete cleaning traineeship; gain Certificate III Asset Maintenance


Skills developed

Trainees gain cleaning skills Trainees demonstrate employability skills through: - performance on the job - attitude to work - attitude to training - retention (completion of traineeships)



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OBJECTIVE

OUTCOMES

MEASURES

EVIDENCE

More personal capital; more choices for future work

Trainees indicate that they have more employment resources and choices due to the program, for example: - qualifications - work experience/work history - confidence at interview - referees


Employment

More income earned



Trainees have a job; gain other employment post-traineeship

All express increased confidence in themselves One trainee is confidently working off-site and has been given responsibility for supervising new trainees

View expressed by both skilled cleaners and some trainees over duration of traineeships was that the trainees did not have the personal capital to find/retain employment in an unsupported work environment. However observation by UC was that “trainees would underestimate themselves in terms of employability. Some trainees have moved significantly on the pathway to being employable.”

At end of traineeships trainees were not actively seeking other employment but three were very keen to continue to be employed with the social enterprise at Kensington

Three trainees are now employed by the social enterprise on the Kensington Redevelopment

One trainee is also employed by MGC to clean an AMES site in Footscray and now prefers this work to working on the Redevelopment

One trainee is doing voluntary work five days a week with a local community organisation

Most trainees had only a very small financial benefit from working (this differed depending on what type of income support people receive), although three commented they were better off financially

One trainee (now employed) claims to be considerably better off financially through a combination of wages and pension

Trainees and UC noted increased pride in the appearance of the Redevelopment

Trainees and UC commented that trainees generally felt ownership of the maintenance/condition of the buildings they clean

Residents have commented positively on the cleaners and good condition of the buildings

80% reduction in complaints about the condition of one of the public buildings that previously had the highest number of complaints

Residents encourage others to move to Kensington – occupancy at 100%

Trainees say their income increases due to training/work

Trainees comment on increased pride in the neighborhood UC Asset Manager, AMES Social Enterprise Manager, supervisor/skilled cleaners notice and comment on this Residents see the Redevelopment as a good place to live

All trainees have training in a recognised qualification, work experience and access to referees

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OBJECTIVE

OUTCOMES


Trainees comment on making new social connections as a result of working with: - other workers Increased - family/friends social Increased social linking across the connectedness workplace is occurring with all workers Increased participation in events on the Redevelopment by trainees

To promote health and wellbeing

MEASURES

EVIDENCE

No real increase in personal social connections reported by trainees as a result of being employed

Reports from skilled workers and residents indicate that trainees are connecting with the broader community of residents through their work

Trainees continue to participate in events at a similar level of engagement as they did prior to the social enterprise

Increased mental wellbeing

Trainees comment on having a sense of purpose Trainees comment on having less depression and/or feeling more positive about their lives as a result of this job Improved personal relationships

All trainees commented on having a changed outlook because of the work

All commented on feeling better, having improved self-regard and decreased depression; they attributed this to working

Traineeship increases personal status; less stigma

Trainees spontaneously say that having a job increases their personal status or reduces perceived stigma

Trainees were proud to be working

Changed Trainees see themselves becoming less attitude; less dependent on welfare. This occurs dependence on regardless of change in income welfare

Three trainees expressed the desire to obtain full time employment

One expressly aspired to cease receiving welfare

Increased physical wellbeing

Some increase in physical wellbeing noted: two trainees commented on improved physical health

Trainees comment on increased fitness due to working Care more about physical health


UC staff noted increased levels of confidence in some trainees


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Enhanced housing and physical environment As noted earlier the vision for the Kensington Redevelopment was the creation of a vibrant inner city living environment for both public and private residents. The developers and the government both recognised that this would require specific place management and that maintaining the appearance of the built environment, and thus property values, would be a critical component in the success of the Redevelopment project. As described in the table above, reports from the Urban Communities Asset Manager responsible for the cleaning and maintenance contracts, the cleaning staff and residents indicate that the cleaning/general maintenance of the buildings on the Redevelopment is of a higher standard than was being delivered by the previous (commercial) cleaning company. It was also noted that private properties on the Redevelopment have continued to maintain market value. Assessment of cleaning: commercial company 65-70%, this enterprise 75-80%. Cleaning is of a better standard, attention to detail is better. [UC] A few residents came up and thanked me. “We’ve never seen the site so clean,” “Thank you for looking after the building.” I am proud of the standard we have at the site. [SC] “I’d like to commend [Trainee] for his utmost professionalism and patience with regard to his duties in my building. … We have lived in many apartments but have been particularly impressed with his attention to detail.” [R]

According to the Urban Communities Public Housing Manager and the Manager Property and Project Services residents have also provided positive feedback about the maintenance of the buildings. Not many residents are ringing to complain about the cleaning of the buildings. Complaints from tenants in [Building X] - the most challenging building to clean on the Redevelopment - have dropped by around 80%. [UC]

Increased employability of participants in the enterprise The evaluation of the enterprise was largely done through collecting qualitative data at the interviews described in the Methodology section. Further to this the evaluation team has been able to track employment outcomes for the participants. In this regard the social enterprise was highly successful as indicated by the data and comments below.

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Training and qualifications

Four trainees have now completed training at Certificate III level

Three trainees were awarded Certificate III in Asset Maintenance

One trainee received a Statement of Attainment (did not complete assessment for all units in the Certificate)

One trainee who was still enrolled in Certificate III in Asset Maintenance left in September 2011 due to ill health but is keen to complete the qualification when well

One trainee left the social enterprise without completing training

More personal capital; more choices for future work The view expressed by both skilled cleaners and some trainees during the traineeships was that the trainees did not have the personal capital to find and/or retain employment outside the supported and familiar environment of the MGC Kensington social enterprise. However, the observation by the Urban Communities Asset Manager was that: Trainees would underestimate themselves in terms of employability. Some trainees have moved significantly on the pathway to being employable. [UC]

When interviewed towards the end of their traineeships (November 2010), none of the trainees was actively looking for alternative employment. However three trainees said they would like to continue to work – the underlying condition being that employment be with the social enterprise and on the Kensington Redevelopment. Q: Would you consider similar (or any other) work if it were not on the Redevelopment? I really only want to work here. [T] … just keep working here. That’s what I’d like. [T]

By December 2010 one trainee said he would like work, whether or not it was on the Kensington Redevelopment. [I’d like to] get into further employment whether it be here or somewhere else. I’d like to further my education. [T]

And, at post-traineeship interviews in mid-2011, one ex-trainee had developed the confidence to work off-site and is now very positive about working at another location. I used to think I wanted to stay here [Kensington Redevelopment] forever but now I’m working at Footscray and I see the difference. It’s more professional. You’re in charge. You’re your own boss. It’s more like working in the real world. [T]

Over the duration of the traineeships AMES, Urban Communities and social enterprise staff noted an improvement in attitudes to work amongst the trainees. At the completion of the traineeship period staff noted the personal development (for example, better strategies for anger management) of a number of the trainees.



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Skills developed When the trainees first came here they didn’t know how to hold a mop. I’m pretty happy with these trainees. I believe they’re doing a good job. [SC]

In contrast to their lack of activity and, in most cases lack of expressed interest, in seeking alternative employment for when their traineeships finished, the trainees’ opinion of the skills they were gaining was extremely positive. From the beginning and throughout their traineeships the trainees felt they were developing new skills – both very specific cleaning skills, and more general employability skills. These slightly conflicting views could reflect the trainees’ lack of confidence to consider employment outside the Kensington Redevelopment and/or previous unsuccessful attempts to gain employment. I was a long time out of work till this popped up, I can’t see what’s changed. [T]

Trainees’ response to the question - ‘Are you learning new skills?’ Initial interview (March-May 2010)

Third interview (Nov-Dec 2010)

Yes. New techniques, new ways of using equipment.

Quite confident as a cleaner – with the basic skills. I’ve learned a lot better how to deal with people. I think I’m a lot better at team work as well.

Yes - how to mop properly, cleaning toilets properly, how to get into routines.

I’ve got pretty good people skills but now I’m learning patience. I don’t get frustrated with what people do.

You wouldn’t believe – it’s unbelievable!

I feel confident as a cleaner.

People skills! Trying to make people I learned how to scrub, buffing – I didn’t know understand that we’re all living on the estate. before, I learned here. … I can clean anywhere! Every place, I know what I’m doing.

By mid-2011 one of the 2010 trainees has earned the confidence of the supervisor and has developed the necessary skills to be placed in a position of responsibility supervising new trainees. I’m supervising a couple of people. I’ve got good people skills. I do it by example. [T]

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More income earned Most trainees had only a small financial benefit from working although this varied depending on what type of income support people were receiving. Three trainees commented they were better off financially and one was able to save a little. It’s been a little better. I’m a little better off. I’ve been able to save a little bit. [T] The job gives me money. I can do everything for my family. [T] I’m not doing it for [income]. I’m doing it for something to do. It’s ridiculous [how little the trainee’s income has increased]. I just need something to do. [T] The rent goes up. When I’m working I’m not earning much more than someone on a pension. [T] It’s helped. … Of course it’s better. [T] It’s very good. [T]

Employment The fact that three of the trainees are now employed by the enterprise and that one is supervising new trainees is testament to their growth in skills, experience and personal capital.

Employment outcomes (as of September 2011) All six of the trainees have achieved different employment outcomes. The employment status of individuals has evolved since the completion of traineeships and will continue to change with time. As of September 2011 employment outcomes were:

full time employment with MGC on the Redevelopment

part time employment with MGC on the Redevelopment; additional hours at a nearby AMES site

part time employment with MGC on the Redevelopment

voluntary work five days a week with a local community service

employed on an extended traineeship until resigned in September 2011 due to ill health

no known employment outcome



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Increased pride and participation in the community Two themes emerge from questions around increased pride in the community environment.

Trainees report a strong feeling of pride and ownership towards their environment

Skilled cleaners and the supervisor express some misgivings about employing residents on the Redevelopment to work there

Trainees: pride in the community environment The majority of the trainees were enthusiastic about improving the physical appearance of the Redevelopment. The Urban Communities Asset Manager confirmed that trainees demonstrated a pride in the community environment: There is evidence that workers/trainees are taking pride in their work. [UC] Residents have commented that they like the cleaners. Having cleaners who live on-site means they have pride in the place. [UC]

Residents themselves have directly contacted the urban Communities Manager Property and Project Services with comments on the positive attitudes and helpfulness of the trainees. One resident commented on the assistance one of the trainees (now employed by the enterprise) had given when they had accidently thrown away gifts in the rubbish. [Trainee] has always been friendly, respectful and accommodating. His assistance in this matter was just an extension of the wonderful service he provides us (as tenants) each day. [R]

Comments from trainees over time clearly indicate their commitment to and pride in their environment. There is also some evidence of increased engagement with other residents on the Redevelopment. Trainees’ responses to - ‘How do you feel about the job now?’ Second interview (July 2010)


I love these buildings like they were mine. I love the people too. Some of them know my name now!

I’ve got an ownership problem with the building [I clean] – it’s mine! I hate the thought of someone else doing [this job] ‘cause it’s mine. I know everybody in there. I don’t want to leave my building – you get attached to it.

The people in the building tell me I’m doing things no one’s done before. I think they’re happy with the work here. I get to clean my own environment – who gets to do that?

There are hardly any complaints any more. I talk to the tenants and ask them to ask me first [if there is a problem].

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Increased participation in the local community Although the comments above indicate a level of engagement with other residents because of/through the work, responses to a specific question about contact, socialising with other trainees were varied, and did not change significantly over the period of the traineeships. I do see the other guys around here. If I see them outside I’ll chit chat. But no, we don’t go out. They had Housing Week a while ago, I came to that. Most of the people around here are pretty friendly – most of them! [T]

Trainees’ responses to - ‘Do you do anything with the others, at work or out of work?’ Second interview (July 2010)


I socialize with a couple of [other trainees].

I try to get to all of [the events on the estate]. I get very passionate too. I see it as my home, the whole thing.

I don’t choose to socialize with [the other trainees].

I do [a lot] as a resident, pulling my weight. I did a lot of volunteering before this job.

I pretty much stay with myself.

Every once in a while [I go to events on the estate], you don’t want to see [other residents] all the time. Otherwise you feel like you’ve never left work.

Employing people who live on the Redevelopment Contrary to the views above expressed by the trainees, some of the skilled cleaners did not always see employing residents of the Redevelopment as best for the enterprise business. There was a concern that if cleaners/trainees lived on the Redevelopment they might react negatively if they saw ‘people making a mess’. There was also some concern that workers who lived on the Redevelopment could go home any time they liked (ie in working hours). As noted above, three residents were employed on contracts at the end of their traineeships. The supervisor and skilled cleaners were initially positive about the work of the three. By mid-2011 the supervisor highly recommended the work of one of the resident/employees but was less positive about employing the other two. However, he was still committed to supporting all three to stay in the job.



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Improved health and wellbeing Increased mental wellbeing All trainees commented on having a changed outlook that they attributed to working feeling better, having something to look forward to and decreased depression. Comments over the duration of the traineeships included the following. Trainees’ responses to the question – ‘Has anything changed in your daily life since you started this job?’ First interview (March-May 2010)


I feel better. [Before the traineeship] I was starting to feel depressed. It’s changed my whole outlook. It keeps me active.

I go to bed at 8.30 – 9.00. I get up at 4.30 – 5.00 looking forward to going to work. How sad is that?! It’s the worst paid job I’ve ever had and it’s the most satisfying.

I was not working [previously], I stayed at home. It was not good. … Now, I am looking for the future.

I feel good. Every time doing this job I feel: this is my job! It’s [the] right job for me. When I [am] at work, I feel good. My mind is working all the time. Before, I stayed at home and … thinking too much.

[Before the traineeship] filling in my days was hard. Not having to fill in my day is good for my head. It makes you feel really good inside. I’m very grateful.

Trainees who had been employed by MGC at the end of their traineeships were given an opportunity to comment on how they felt now they were working. Trainee’s response to – ‘How do you feel about yourself now you have been working for almost 2 years?’ Follow-up interview (mid 2011) 100% better. The more I work, the more I feel normal, the more I move into life … [T] I’ve never been so motivated in my life. [T]

Increased personal status; less stigma Trainees were proud to be working, and to be seen to be working. The Urban Communities Asset Manager noted increased levels of confidence: Having a job in the enterprise has increased the confidence levels [pride in working] of some of the trainees. [UC]

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Not all trainees commented on their attitude to working, but those who did were very clear about how they felt. I needed some work. I haven’t worked for seven years – I was retrenched. I love saying, “I’m working now.” I get such a buzz out of it! I’m very proud of myself for working and I make sure everyone else knows! I’m very proud of being a cleaner on the estate. [T] Public tenants are more despondent. They don’t work, you see the difference. They don’t feel good about themselves. [T]

Changed attitude: less dependence on welfare This indicator is significant in measuring the impact of employment in the enterprise on the trainees. It is also one of the more complex to evaluate. The circumstances of each of the trainees were quite different – in terms of benefits (disabilities and unemployment) and in terms of impact of earned income on public housing rents. Despite the impact on their benefits, Health Care Cards and rents, three trainees express the desire to find full time employment. One specifically referred to not wanting to be ‘a burden to society’. These three trainees are now employed by MGC Kensington - two on the Redevelopment and one is working both on the Kensington Redevelopment and at a nearby AMES site. Trainees’ responses to – ‘How has the job been for you financially?’ First interview (March-May 2010)

Second interview (July 2010)

I wanted to give back to tax payers … . I don’t want to be a burden to society any more.

I’d like full-time work [on the Redevelopment].

[I want] to get full time work as a cleaner.

As noted above, trainees who had been employed by MGC at the end of their traineeships were given an opportunity to comment on how they felt now they were working. These questions elicited the following responses. Follow-up interview (mid 2011) The more I work … the more I want to get away from Centrelink. [T] I’m thinking about doing more – going full time. If I were to go off the pension I’d lose the [Health Care Card] concession. If I got 50 hours a week I’d do it. [T]



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Increased physical wellbeing Some increase in physical wellbeing was noted by the trainees, especially early in the traineeships. One trainee consciously wanted to improve physical fitness: I wanted something that could keep me physically active. [T]

Another trainee was happy to be improving their physical condition but struggled with doing physical work in warm conditions. I’m puffing and panting when I do the work and I’ve lost 3 kilos – I’m stoked! [T] It’s the heat that knocks me around. It’s very hot upstairs – there’s no air. It can be hard. [T]

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IMPACT OF THE SOCIAL ENTERPRISE ON INDIVIDUALS As detailed in the previous section of this report, interviews with the trainees were undertaken to assess the social impact of the MGC Kensington social enterprise. We were specifically looking for any impact in terms of:

attitude to the physical environment of the Redevelopment (their home environment)

increased skills and employability

social connectedness

physical and mental wellbeing

Below we outline, in brief, what we understand the trainees’ experiences of their traineeships in the social enterprise to have been, based on our interviews with them.

Trainee 1 Trainee 1 applied for the traineeship at MGC Kensington following a period of unemployment. He was interested in gaining a qualification and learning new skills in an area of work where he had some experience already. He also said that he thought doing the traineeship would be better than spending time at home without a particular focus. Trainee 1 has a health condition. This condition has a bearing on the hours he is able to work and the level of stress he is able to experience. Trainee 1 said that managing his health issue is his highest priority in relation to employment. From the beginning of the traineeship he reported feeling that the supervisor and other people he worked with understood the significance of this issue and supported him well. Throughout the traineeship Trainee 1 expressed an appreciation of what he was learning both in relation to cleaning and in relation to dealing with other people. Towards the end of the year he spoke of feeling quite confident as a cleaner. He also said he had learned good skills in relation to the interpersonal aspects of his work. “I think I’ve learned a lot better how to deal with people. I can see different situations from different points of view. I think I’m a lot better at team work as well.” Although appreciative of what he was able to learn, Trainee 1 also said he would have liked to have extended his skills further, for example by being trained in the use of specialized cleaning equipment. He had understood that this was part of the traineeship and was disappointed that not all his expectations had been fulfilled. He also said that he would have liked the theoretical learning within the traineeship to have been more challenging. Trainee 1 lives on the Kensington Redevelopment and participates in local community events regularly. He said he valued the benefits of working where he lives: “I like the idea that I’m close to home.” Based on his own experience Trainee 1 suggested that future trainees should be recruited from within the community living on the Redevelopment. Trainee 1 successfully completed his traineeship and gained Certificate III in Asset Maintenance in early 2011. He is now working part-time for MGC on a six month contract.



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Trainee 2 Trainee 2 applied for the traineeship at Kensington after a prolonged period of unemployment. She lost her long term job many years earlier, an event that “broke [her] heart.” In her interviews Trainee 2 spoke about how hard she had found it to fill in her days when she was not working and the difference it made to her to not have to do that anymore. She conveyed great pride in being employed again: “I’m very proud of working again and I make sure everyone knows!” Trainee 2 said she was “very happy and very grateful” for the opportunity to do the traineeship. She also spoke of the work being good for her physically as it kept her fit. Midway through the traineeship Trainee 2, a resident on the Redevelopment, spoke about having a great sense of attachment to the building she was responsible for. She liked knowing the tenants and said she felt proud of being a cleaner. She spoke of not wanting to work anywhere other than the building she was working in. Towards the end of the traineeship Trainee 2 described herself as having good general cleaning skills appropriate to the building she was working in. Trainee 2 completed her traineeship in December 2010 and now has a Statement of Attainment for the units she completed from Certificate III in Asset Maintenance. She was offered work in the MGC Kensington enterprise but, to everyone’s surprise, declined this. At the same time she expressed doubt about ever finding another job: “I was a long time out of work till this popped up, I can’t see what’s changed.” At her exit interview Trainee 2 said she chose not to continue working as a cleaner because she was finding the work too demanding physically. She again expressed that she thought it was unlikely she’d find a job and that she was considering doing voluntary work instead: “I can’t sit here all day.” As a resident, Trainee 2 describes the Redevelopment site as “100% better” than it has been. In relation to the building she lives in she said: “It’s all done perfectly, everyone does a really good job.” She is strongly in favour of recruiting future trainees from the community on the Redevelopment: “Especially for some of the people here that would never get work... including myself.” Trainee 2 said that overall the traineeship had been a positive experience for her: “I was proud of myself. I liked people seeing me go off to work.” Trainee 2 is now working five days a week as a volunteer for a local community service.

Trainee 3 Trainee 3 did not wish his story to be included in this report.

Trainee 4 Trainee 4 left MGC Kensington before completing his traineeship. We were unable to reestablish contact with him for permission to include his story here.

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Trainee 5 Trainee 5, also a resident on the Kensington Redevelopment, applied for the traineeship because it was local work and because he wanted to be physically active. Trainee 5 also said many times that he wanted to make a positive contribution to the community and not be a “burden to society.” Trainee 5 was enthusiastic about cleaning and determined to make this his vocation from the beginning of the traineeship. He is very positive about living on the Redevelopment and expressed great appreciation for the opportunity to work where he lives. “I just like it. It keeps me busy. I can make my environment better. It makes the tenants feel better.” He was keen from the beginning to remain a cleaner on the Kensington Redevelopment beyond the traineeship. Trainee 5 has had a number of challenging health issues. Throughout the year he spoke of the positive impact of the work on his wellbeing: “It’s changed my whole outlook. It’s priceless.” Towards the end of the training period Trainee 5 said that he no longer requires medication for a long term health condition and suggested this was a consequence of the traineeship. He reported being very happy. Trainee 5 believes he has become a very good cleaner and has developed excellent people skills: “I’ve got more patience. I don’t get frustrated with what people do.” In each round of interviews he confirmed that he loved being a cleaner on the Redevelopment. When asked at the end of his traineeship whether he would consider work elsewhere, Trainee 5 said he really only wanted to work on the Kensington site. Trainee 5 is strongly in favour of recruiting residents from the Redevelopment for jobs relating to the site: “People living in the estate expect a lot more of it.” As a resident, his view is that the site is very well maintained. Trainee 5 completed Certificate III in Asset Maintenance early in 2011 and has since accepted a six month contract as a cleaner with MGC Kensington. Since becoming a MGC Kensington employee, Trainee 5 has been assigned to work at and supervise the cleaning of an AMES office at another location. This has been a very positive experience for him: “I like packing my lunch, getting public transport to work – it’s more of a real job.” Trainee 5 now prefers this work off the Redevelopment to the work at Kensington: “I feel more like myself. I didn’t think I wanted responsibility, now I’m wanting to heap it on.” When asked how he feels about having worked for MGC Kensington for nearly two years, Trainee 5 responded: “100% better. The more I work, the more I feel normal, the more I move into life, the more I want to get away from Centrelink.”



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Trainee 6 Trainee 6 joined MGC Kensington a few months later than the other trainees. Trainee 6 worked as a cleaner overseas and as a housekeeper at a hotel in Australia. She applied for a traineeship because she wanted to develop her skills as a cleaner and gain a formal qualification. When interviewed for the first time, Trainee 6 spoke very strongly about the benefits of the traineeship for her mental health. She described having experienced a long period of personal difficulty and said her self-esteem had increased dramatically through working at Kensington: “My self is very good now. Everything is good. Before, everything is dark. Now I am looking for the future.” Trainee 6 also spoke about her pride in earning an income and the importance of being able to provide for her family. Soon after commencing the traineeship, Trainee 6 was offered and accepted full time hours within the cleaning enterprise. She has worked independently throughout most of her traineeship. Trainee 6 suggested some local residents could be very difficult at times. “I don’t get angry – it’s my job,” she said. From mid-year she said she felt very skilled as a cleaner: “I can clean anywhere!” Trainee 6’s view is that the appearance of the grounds and the buildings on the Kensington Redevelopment improved significantly in 2010: “Now it’s better. The place is beautiful!” Although she has continued to find the work beneficial for her general wellbeing, Trainee 6 has had some health issues arise during the traineeship. She has reduced her working hours and taken periods of leave to address these issues. However, she would like to return to work and complete her Certificate III in Asset Maintenance. Trainee 6 wishes to work as a cleaner in the long term and, if possible, keep working at Kensington: “I am happy. I want to stay here for a long time.”

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THE FUTURE OF MGC KENSINGTON Growth, not only sustainability, is critical if a social enterprise is to be able to provide training, employment and work experience for new groups of disadvantaged job seekers while also providing on-going employment for some of the earlier trainees.

MGC Kensington today AMES limited commercial experience in the cleaning and maintenance of large (public) buildings has impacted on the growth of the business. However, the enterprise is now well established and has increased business.

The MGC Kensington social enterprise is now cleaning two additional buildings on the Kensington Redevelopment. The original contract with Urban Communities was for 23 buildings. The contract now covers 25 buildings.

The enterprise has won additional business with AMES and is cleaning a number of sites including - Head Office at Lt Collins St, AMES Flagstaff, AMES Footscray, the Coburg Industry Training Centre and Maidstone Residential Accommodation.

The enterprise has also won a contract to clean the Big West office in Footscray (Big West is a community-based, contemporary arts and cultural festival in the western region of Melbourne).

Where to from here? In the second year of operation (2011) MGC Kensington has employed a further six job seekers on traineeships. These traineeships are covered in part from the Urban Communities contract, in part through increased business, in part by state government funding for trainees and, for the first half of 2011, in part from the DEEWR Jobs Fund investment. While training and support may not continue at this level (ie for six trainees at any one time), the social enterprise management and staff are confident that MGC Kensington is delivering excellent service against the contract and will retain current business. This means that the enterprise can continue to provide training and support for a number of trainees each year. They are also confident that the enterprise will continue to grow and be able to offer more employment contracts as job seekers complete their training. For example:

The Social Enterprise Manager is currently negotiating cleaning contracts for nine additional AMES sites.

Discussions with the local Kensington Child Care Centre regarding cleaning their premises have been initiated. Kensington Child Care Centre is funded by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and caters for 50 children a day.



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Business growth and employment outcomes for trainees Through making a case for social procurement to targeted not-for-profit and/or government funded organisations, the enterprise has expanded the business and is currently able to provide full-time and part-time contracts for three of the original trainees. The growth of MGC Kensington means that the enterprise has also been able to offer paid employment to some of the second group (2011) of trainees. Three of the 2011 trainees now also have employment in addition to their traineeships. The social outcomes for job seekers involved in MGC Kensington provide evidence of the social return on investment that can be generated through a social enterprise. Social procurement by government and/or government funded organisations will ensure the continued capacity of social enterprises like MGC Kensington to provide training, support and employment for disadvantaged job seekers who may not otherwise find a way into the workforce while also delivering excellent services.