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«THE ECONOMIC IMPACT AND COST OF HEARING LOSS IN AUSTRALIA A report by Access Economics Pty Ltd February 2006 Listen Hear! The economic impact and ...»

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Employment opportunities may be affected by gender, age and certainly by increasing levels of disability. To this end the employment data were re-examined controlling for gender as well as age in two groups, people aged 15-44 years and people aged 45-64 years.

Table 5-3 shows employment outcomes for the younger age group. There were no significant differences for employment outcome by hearing loss, although the result for females with hearing loss was borderline.

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Table 5-4 shows employment outcomes for the older age group. The age-standardised employment rate for males 45-64 years with hearing loss was 20.5 percentage points lower than that for people without hearing loss. Similarly, the age-standardised employment rate for females 45-64 years with hearing loss was 16.5 percentage points lower than that for people without hearing loss.

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This implies that if people with hearing loss were employed at the same rate as average Australians of the same age, then an additional 158,876 people would be employed in 2005. With average (full-time and part time) weekly earnings for all Australians of $805.4013, the annual cost of lost earnings due to workplace separation and early retirement from hearing loss is $6.67 billion. This equates to 0.79% of GDP.

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Hearing loss does not appear to induce extra costs in terms of additional absenteeism. Indeed, the opposite may be the case as, in one study, people with 13 http://www.abs.gov.au/websitedbs/d3310114.nsf/Home/key%20national%20indicators

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hearing loss were less likely to have been absent from work in the previous two months (Mild OR 0.22 CI 95% 0.12-0.40; Moderate OR 0.14 CI 95% 0.05-0.33; Severe OR

0.32 CI 95% 0.14-0.71; Wilson, 1997:106). This phenomenon may be explained by the postulate that people with disabilities may experience greater job insecurity and hence be less prepared to take time off, even when unwell (Barnes, Thornton and Campbell, 1998).

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Taxation revenue foregone Reduced earnings due to reduced workforce participation, absenteeism and premature death will also have an effect on taxation revenue collected by the Government. As well as foregone income (personal) taxation, there will also be a fall in indirect (consumption) tax, as those with lower incomes spend less on the consumption of goods and services.

Personal income tax foregone is a product of the average personal income tax rate and the foregone income. With hearing loss and lower income, there will be less consumption of goods and services, estimated up to the level of the disability pension.

Without hearing loss, it is conservatively assumed that consumption would comprise 90% of income (the savings rate may well be lower than this). The indirect tax foregone is estimated as a product of the foregone consumption and the average indirect tax rate, derived from the Access Economics macroeconomic model.

Access Economics estimates that in 2005, $2.00 billion of potential taxation revenue will be lost due to the reduced participation of people with hearing loss in the paid workforce. Of this, $1.33billion (67%) is lost income tax and $0.67 billion (33%) is lost consumption tax.

As noted in the preamble to Chapter 5, lost taxation revenue is considered a transfer payment, rather than an economic cost. However, raising additional taxation revenue does impose real efficiency costs on the Australian economy, known as deadweight losses. Administration of the taxation system costs around 1.25% of revenue raised (derived from total amounts spent and revenue raised in 2000-01, relative to Commonwealth department running costs). Even larger deadweight losses also arise from the distortionary impact of taxes on workers’ work and consumption choices.

These distortionary impacts are estimated to be 27.5% of each extra tax dollar collected (Lattimore, 1997 and used in Productivity Commission, 2003, p6.15-6.16, with rationale).

Access Economics estimates that $0.58 billion in additional deadweight loss is incurred in 2005, due to the additional taxation required to replace that foregone due to the lost productivity of people with hearing loss (Table 5-5).

Welfare payments made to people with hearing loss who are no longer working must, in a budget-neutral setting, also be funded by additional taxation. The deadweight losses associated with welfare transfers are calculated in Section 5.5.2.

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People with hearing loss have poorer educational and employment outcomes than the rest of the population (Hogan et al, 1999). Table 5-6 reports educational outcomes for adults with hearing loss by degree of loss. The number of people with more severe degrees of hearing loss reporting completing a trade course or higher is less than half that of the general population. Similarly, in the Beaver Dam study, compared with people with a college degree, people with hearing loss were 2.42 times less likely to have completed high school (Cruickshanks et al, 1998:881).

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A range of audiological and educational services are available for the 1,457 children

with hearing loss aged under five years. Interventions can include:

neo-natal hearing screening services;

early intervention programs for children aged less than 3 years, involving individual and/or group interventions and encompassing mode specific (sign/speech) interventions; and pre-school education programs either at a specialist centre or visiting services to existing pre-schools.

Data on early intervention and service costs for children with hearing loss aged less than 5 years was available from the Royal Institute for Deaf and Blind Children (RIDBC), Deaf Children Australia and Australian Hearing (Table 5-7).

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Universal neo-natal hearing screening has begun to be implemented across Australia.

This service seeks to identify children born with hearing loss at the earliest possible time. Unfortunately, data on the costs of this service could not be obtained. Thus the total estimated cost for early intervention services is $20.8 million in 2005.


Presently there are no national data on the costs of school education for deaf and hearing impaired students. The Australian Ministerial Council on Education, Employment, Training and Youth Affairs (MCEETYA) has recently commissioned a scoping study to address this shortfall in data. However, it will be at least another year before a full study is commissioned and the data collected. Australian data are available on the costs of regular school education in Australia in the National Schools Report (MCEETYA, 2001).

International data: The Special Education Expenditure Project (SEEP), conducted by the Centre for Special Education Finance in the United States, provides extensive data on the costs of educating students with disabilities. The data are based on a nationally representative, “stratified random sample of 1,769 schools in 448 school districts and 30 affiliated intermediate education units” (SEEPa, 2003:4). SEEP used a resource cost model to document by individual student the nature and range of services utilised.

As SEEP (2003a:14-15) reported:

“These resources include the teachers, related service providers or paraprofessionals providing these services, the class size or numbers of students receiving these services at the same time, special equipment, supplies and materials. Services include classroom instruction, consultation of resource teachers with regular classroom teachers, pullout programs in resource rooms, integrated services provided in regular classrooms to students with special needs and overall administration and support....Detailed knowledge of the services provided, the ingredients used to provide these services, and the cost of each ingredient, along with the cost of school and district administration and support, allow for the calculation of the total expenditures required to educate each student”.

While the exact dollar values associated with special education in the USA may not be directly comparable to Australia, the nature and range of services appear similar.

Moreover, the SEEP provides a ratio of costs of education for students with a range of

disabilities as compared with students without disabilities:

The average spending ratio for students with disabilities (excluding homebound students) to regular class students was 1.9:1.

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The average spending ratio for students with specific learning disabilities was 1.6:1.

The average spending ratio for deaf and hearing impaired students was 2.4:1.

The average spending ratio for students with multiple disabilities was 3.1:1.

School retention rates for deaf and hearing impaired children are poor. The British Association of the Teachers of the Deaf (2004) report that 86% of deaf and hearing impaired students leave school by age 16 years. Extrapolating these figures to Australia, the population of deaf and hearing impaired school students is estimated to be 20,918 students. 14 Australian partial data: MCEETYA (2001:23) reports that the average per capita expenditure on government schools ($/full time equivalent (FTE) student) was $9,398 made up of $8,937 recurrent expenditure and $461 capital expenditure. SEEP (2003:8-11) demonstrate that the majority of costs in disability education are service costs. Recurrent expenditures were inflated to 2005 based on changes to average weekly earnings, while capital costs were inflated by the health component of the CPI.

For 2005 then, the total expenditure on government schools per FTE student was estimated as $10,619 ($10,098+$521) per student.

Costs for deaf education were available from the Disability Programs within the New South Wales Department of Education and Training and from the Victorian Department of Education and Training (specific data request).

In New South Wales there were approximately 1,400 students in mainstream settings receiving itinerant support and approximately 300 students in small support classes.

The latter are usually for severely to profoundly deaf students The cost of an itinerant teacher of the deaf (ITD) with salary and on costs per teacher was estimated to be $90,000 per annum, reflecting the high level of qualifications and experience of the teachers. In November 2005, there were

240.7 FTE ITDs. This equates to $21.7 million per annum or $15,474 per student. The costs of itinerant support are in addition to the usual costs of education.

Support classes are serviced by a specialist teacher of the deaf, with support from at least a half time teacher’s aid. The cost of the specialist teacher is as per the ITDs and the estimated cost of the teacher’s aid is $35,000. There are 55 support classes in New South Wales. This equates to approximately $5.9 million (($90,000 + $17,500)*55) or $19,708 per child. However, since support classes replace the usual costs of education ($10,619), the additional cost of educating children in the support setting is approximately $9,090.

Proportionately, the ratio of mainstream to support classes was (1400:300) 82%:18%. Extending this ratio nationally provides 8,921 students with itinerant support and 1,958 students in support classes.

New South Wales estimates that there are additional costs that cannot be readily quantified such as capital costs, device maintenance costs and transport costs to support classes.

14 Note that this uses 86% of the estimate of children aged 5-16, which includes 15 and 16 year olds estimated from the Wilson rather than Australian Hearing data, and thus including the higher prevalence rates at age 15.

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The New South Wales support costs are comparable with figures provided by the Royal Institute for Deaf and Blind Children (RIDBC) who estimate a cost of $13,709 for itinerant support services. RIDBC also estimates the overall cost of educating a student in the signing setting to be $52,211, inclusive of the costs to educate the student if they were not deaf. For Victoria, costs were specified for students with “a bilateral sensori-neural hearing loss that is moderate/severe/profound and where the student requires intervention or assistance to communicate”. The Department identifies 600 students in this category presently, receiving support totalling $21.02 million annually (or an average cost of $35,033 per student. Compared with the 1700 students in NSW receiving assistance, the funding in Victoria seems to be spread over a fewer number of students with more severe hearing loss.

In this analysis the NSW cost per student estimates are used as: (1) they are more likely to reflect the spectrum of severity of hearing loss; (2) segmentation by type of support is possible; and (3) the approach errs on the conservative side.

Costs were applied proportionately 82:18 to the 20,918 children with hearing loss aged 5-16 years. The total ‘extra’ cost of education for children with hearing loss was thus estimated as $117.2 million in 2005.


Australian and overseas studies note that hearing impaired students with high support needs consume considerable services in higher education (SEEP 2003a,b; Devlin, 2000:15). Interpreters and note takers are identified as comparatively high costs items by Devlin (2000) across a number of western countries including the United Kingdom and Canada (Jones, 1994). In the United Kingdom, Devlin reports that up to an equivalent of A$30,000 (year 2000 dollars) was paid to students requiring non-medical helpers such as interpreters. In a review of international studies, Devlin (2000) reports that in Ireland the average support costs for a hearing impaired student were A$6,705.

The North Melbourne Institute of TAFE (NMIT) advise that 60% of the Victorian TAFE budget to support students with disabilities is used for Deaf students alone.

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