MODELLING SHOWS VICTORIAN RECIDIVISM RATES SLIGHTLY UNDER 60%

Here’s how the model works. I will do a separate post on the actual numbers.

That means 60% of prisoners wind up back in gaol. So if one of the aims of the prison system is rehabilitation then it is failing miserably.

Prisoners come out of prison into the community. We know that 43.7% of prisoners returned to prison within two years of release having reoffended.

This actually means that 28% return after one year and 24% return after two years. But, prisoners continue reoffending in subsequent years. Statistically, this means 19%, 15% and 12% reoffend in the next three years. After the numbers are relatively inconsequential.

System Dynamics is very good at modelling this sort of problem. This is what the model looks like.

Let’s assume that 100 prisoners were released flow into the conveyor on the right-hand side.

Total released

Year 1

Year 2

Year 3

Year 4

Year 5

100

72

55

45

38

33

Numbers who remain in the community

Year 1

Year 2

Year 3

Year 4

Year 5

No of Recidivists

18

17

10

7

5

Number re-offending each year

The graph of the recidivist numbers suggests the modelling is conservative. However, this comes with a caution that is probably justified.

The original 43.7% that the modelling is based on is based on empirical evidence and the modelling is based on statistical projections.

The causes of recidivism are deeply entrenched in the society into which the prisoners are released and are difficult to eradicate. However, with some prisons returning as many as 11 times, recidivism is a profound problem for the Victorian system and without finding some solution the numbers in Victorian prisons will continue to escalate.

Victoria’s prison population has almostdoubled over the last decade.

It is gone from 4500 to just under 9000. The prison population is growing faster than the general adult population which increased by 24% over this period.

The rate of imprisonment has increased from 62 prisoners per 100,000 Victorian adults in 2000 to 118 per 100,000 in 2018, an increase of 90%.

The Andrews Government has earmarked $1.8 billion in the budget for capital spending on prisons, the centrepiece of which is a new 1248-bed prison planned for outside Geelong. The Andrews government expects prisoner numbers to soar from 8110 today to 11,130 by June 2022.

If prison numbers continue growing at the current rate, there are some implications for prison capacity in the next decade.

Modelling indicates that if prison numbers continue to rise as they have over the last decade they will reach 16,000 by 2030. Prison capacity is scheduled to rise to 12,800 by 2022. The modelling indicates that prison capacity will be reached by 2027.

This will leave the shortfall of 2800 by the end of the decade.

That’s two new prisons, both bigger than the $1.8 billion one planned for 2022. And both bigger than Victoria’s current largest prison, Ravenhall.

It’s probably time for a rethink of justice policy in Victoria.

The Victorian prisoner population has grown by over 160% in last decade with 35 per cent of prisoners now on remand.^{[1]} The prison population is growing faster than the general adult population which increased by 24% over this period. (Source: Corrections Victoria’s Annual Prisoner Statistics).

The rate of imprisonment has increased from 62 prisoners per 100,000 Victorian adults in 2000 to 118 per 100,000 in 2018, an increase of 90%.

The Andrews government expects prisoner numbers to soar from 8110 today to 11,130 by June 2022.

The current capacity of the Victorian prison system is 8900.^{[2]}

Currently, it is planned to increase prison capacity by 3700 by 2022. This will bring the total planned capacity to 12,600^{[3]}.

When the planned capacity for 2020 is compared to the modelled prediction of prisoner numbers by 2030 based on current growth rates, it can be seen that the new capacity limit will be reached in 2027.

This will leave the shortfall of 3312 prison beds by 2030.

Victoria’s largest prison, Ravenhall now has expanded its capacity to 1600 from its original 1300 through the use of double bunking.

The projected increase will require the building of at least two new prisons with the planned capacity of that of Ravenhall .

^{[1]} A. Freiberg and S. Ross, Sentencing Reform and Penal Change: The Victorian Experience (The Federation Press, 1999); Australian Bureau of Statistics, Australian Demographic Statistics, Dec 2018, Cat. No. 3101.0 (2019); Australian Bureau of Statistics, Prisoners in Australia, 2018, Cat. No. 4517.0 (2018).

Scott Morrison’s push for Australians to download the Covid-19 App appears to be meeting with mixed success. There are a couple of reasons for this.

Firstly, so far 4 million people have downloaded the App.

The government claims that, with this level of compliance, it’s approaching the threshold 40% for the App to be effective.

It is difficult to assess whether this is correct.

There are 18 million mobile phones in Australia. There will also be multiple phone per person. So, it’s difficult to assess what level of take-up is necessary. Four million is only just over 20% of 18 million. So, it really depends how you count: total number of phones or total number of people with phones.

If someone has more than one phone, they really need to download it onto all of their phones.

Secondly, there is not universal support for downloading the application.

A range of concerns have led to some high profile people not downloading the App.

One is Independent Federal MP Andrew Wilkie.

Wilkie, who has worked for theOffice of National Assessments (ONA) and was a Lieutenant Colonel in the Australian Army, has stated

“it is not my intention to use the Federal government’s pandemic phone app until I’m convinced it’s effective and secure. Until then I remain unconvinced that the likely low uptake rate in the community will achieve anything other than give people a false sense of safety and encourage them to drop the personal health precautions

In addition, I don’t trust to government implement, manage and safeguard the system without risk of leaks or hacks or to limit the use of the system to the pandemic.”

John Roskam, who heads the Institute of Public Affairs think tank, which is influential with many Liberal MPs, said the app was “very bad and very dangerous”.

“There is no way the government or any technology company can be trusted with that information, and guarantees the government gives are worthless,” he said. “It is authoritarian and goes against everything the Liberal Party stands for, and it is incredible it is even being considered.”

Independent MP Zali Steggall tweeted that a “lack of trust in, and transparency by, government is a major hurdle to people accepting [the] contract tracing app”.

Barnaby Joyce has also refused however this may not have been an influential decision.

Morrison has also unwittingly established a systemic problem for himself. The concern about security, the trustworthiness of governments, the lack of transparency over the source code and the effectiveness of the application itself may have the impact of stalling the number of applications downloaded.

The dilemma is highlighted in a paper by behavioural economist Christian Thöni of the University of Lausanne: The majority — about 60 per cent — are “conditional cooperators”. They cooperate if they believe others will cooperate.

A rapid uptake of the App would have created what is known as a “Success to the Successful” structure, where the number of people downloading encourages others, the conditional cooperators, to do so.

Unfortunately, if this does not happen then the result will be a “Failure to the Failing” structure. With the low numbers of people downloading encouraging others not to download.

This Causal Loop Diagram shows how this dynamic is established.*

The problem for Morrison is that, unless the initial download momentum is strong enough to convince the conditional cooperators, he will not get the numbers necessary for the application to be successful.

Making the success of the Covid-19 App a condition for easing the conditions of the lockdown may be sufficient to reverse the negative effects of the left-hand side of the CLD.

But if it isn’t, then Morrison will effectively be punishing the people who have complied with the government’s wishes and that could cost him significant political capital.

* An “S” end of the arrow means that the variables move in the same direction: if the first goes up the second goes up, if the first goes down, the second goes down. An “O” means the variables move in the opposite direction.

In this blog, I discussed how Victoria’s prison population has increased by 80% in the last decade, primarily as a result of a “tough on crime” approach by both sides of politics

This is a simple system dynamics model of the prison population used in that blog.

System dynamics models such as this one allow decision-makers to vary certain policy levers and understand how the system functions over a given time as a result of those changes.

The model produced two sets of data which indicated that the government may have overestimated prison numbers.

The projection of rates of Incarceration, Release and Recidivism.

The projection of the prison population to 2023..

While this simple model yields some insights into the problem, it provides no insight into the potential policy leverage points in the system. To do this requires simulation with a larger and more sophisticated model.

This simulation models the individual courts (Supreme, County, Magistrates) and their outputs.

It would also model people being held in remand awaiting trial. This element of the model is extremely important as, according to the Victorian Ombudsman, they represent 50% of the prison population. In addition 50% of this group is not convicted despite having been held in remand.

The model would also capture the feedback effect of recidivism which is particularly important with the rising prison populations.

The model of the Prison Sector would include length of incarceration for each one of Victoria’s prisons.

This would also model the impact of variations in release rates, such as early release as result of rehabilitation programs, from various Victorian prisons.

The power of such a model is that it allows decision-makers to identify and evaluate policy delivery points. Policy delivery points are located in the flows in and out of the stocks.

The following diagram indicates a set of policy levers relating to remand and diversion programs.

In this case the policy levers are

1 the rate at which bail is granted or not granted,

2 the rate at which individuals are put into diversion programs and

3 the rate at which they complete these programs

Each one of these can be varied in the model and the impact of the variation on the total system evaluated.

A separate model could also be developed to simulate the financial implications of the variations in the court and prison models.

Victoria’s prison population has increased by 80% in the last decade, primarily as a result of a “tough on crime” approach by both sides of politics

The annual cost of running the state’s prisons is now more than $1.6 billion, triple the outlay in 2009-2010. As well, the government announced a record $1.8 billion in new capital spending on prison infrastructure over four years in a bid to accommodate 1600 more prisoners.

Projections released exclusively to The Age reveal that the growth will continue into the foreseeable future: the Andrews government expects prisoner numbers to soar from 8110 today to 11,130 by June 2023.

This is a simple system dynamics model of the prison population

From published figures is possible to model the rates of prison release, recidivism and first offender incarcerations up until 2019 and then project for the next four years until 2023.

The model has a number of assumptions: that the recidivism rate will be 43% after two years, that the average stay in jail is slightly over one year and that incarceration rates will be linear based on 2008 – 2019 figures. Release and recidivism rates rise in line with the increase of incarceration.

The difficulty with this linear projection is that it shows no sign of flattening. It is reasonable to assume that sometime in the future incarceration rates will plateau. When is a question.

Given these assumptions and these increasing rates of incarceration, The model shows the growth in the gaol population.

The projection for the prison population in 2023 is 9600, 15% below the government’s estimate of 11,130.

For the prison population to reach the government’s estimated total, there would need to be an increase in incarceration rates, recidivism rates or sentence length.

At present, there is nothing to suggest that these rates will change.

However, the government plans to increase the number of beds in prisons by 1600 over the next four years. This will take prison capacity in Victoria to 9700, just 100 above the total projected in the model.

In a previous blog, I modelled the superannuation contributions of a full-time employee earning $60,000 a year. This employee retires with a superannuation lump sum of $1.1 million

In the first section of this blog I will model a female employee on $60,000 a year who works full-time until she is 29 and when she takes four years off to have her first child,

She returns to work full-time for two years, then takes another four years off when she turns 35 to have a second child. She then returns to work half-time until she turned 60 when she returns to work full-time, in order to boost to superannuation savings, until her retirement at 65.

This is what her employment history looks like in graphical form

At retirement, her lump sum is $780,000, just over 70% of the lump sum of a full-time employee.

The huge advantage of the current scheme is that, for the female employee, her superannuation fund continues earning interest during the periods when she is not working.

However her employment pattern has significant implications for \ her retirement income. You can see the details of the retirement income of the full-time worker in this blog.

On retirement, she can draw down $60,000 a year until she is 85 when her superannuation will run out.

While $60,000 year compares well with her final post-tax salary of $53,000, she is in nothing like the position of the full-time employee whose superannuation lump sum declines only slightly after retirement. When the retiree dies at the age of 85, there is still has $908,000 in his superannuation account. This can become part of his estate and passed on to the children.

This is a luxury that the female superannuation does not have, given her employment history.

If the full-time employee wishes to leave nothing in the superannuation fund and assumes he will die at 85, he can draw a retirement income of $87,000 a year. That’s 34,000 tax-free dollars more than his working income of $54,000 and $27,000 more than a female employee with a different work pattern.

If there is to be a debate about whether superannuation contribution rates should be 9.5% or 12%, it also needs to be a debate about how the superannuation savings of women who choose to move in and out of the workforce or to work part-time, can be supplemented.

One of the toughest problems retirees face is making sure their money lasts as long as they do.

My modelling shows this is not likely to be the case for someone in Australia who enjoys continuous employment between the age of 20 and retirement at 65.

As a retiree, you also stop paying tax.

After you have been paying into your superannuation fund from the age of 20 to your retirement age of 65, you will stop making contributions and start drawing your retirement income from the superannuation fund.

Retirement incomes are tax-free in Australia. This is a very important element in retirement planning

The contributions side of the model, discussed in an earlier blog, is based on an annual income of $60,000 pa, an annual interest rate of 5%, and a contribution rate of 9.5% pa.

It can be described as a very conservative model.

The model makes no allowance for inflation or cost-of-living rises to make the principles clearer.

There is now a new element to your model: the outflow Retirement income.

In this case, you have opted for a retirement income of $53,000 a year. Your take-home pay after tax on an income of $60,000 a year was $52,750.

The model also assumes that you live to be 90 years old.

In other words, you have a Retirement income equal to your take-home pay was working

The dynamics of this model now look like this:

The interesting thing about this graph is that your super fund continues growing.

This is because your superannuation fund continues to accrue interest while you are receiving your Retirement income.

The interesting thing about these dynamics is that upon your death at the age of 90, there is still money in your super fund.

In fact there is $1.7m still in the account.

There has been discussion in the media from a number of columnists saying that superannuation funds were not designed to provide legacies for children.

But in this case, your estate will benefit by $1.7m which will be given to your dependents.

If you decide you don’t want to leave any money to your dependents, you can decide to empty your superannuation fund of the time you turn 90.

To do this you can draw a retirement income of $78,000 pa.

This is $25,000 a year more than you are earning when you were working. Enough for the occasional overseas trip.

During your working lifetime, your employer will pay into a superannuation account for you at the current rate of 9.5% of your salary. These payments will continue until you retire.

A simple System Dynamics model of your super account during your working life looks like this.

This model is based on your earning $60,000 year throughout your working life from age 20 to retirement at 65. While this is a simplification of what really happens, it helps to keep things simple in the early stages of an explanation of superannuation.

In this model

Contributions = Salary * Contribution rate

Interest Earnings = (Accumulated) Super * Annual earning rate

The earnings from the stock market are constant at a conservative 5% in the model. Recently stock market returns have been much higher than this. I will discuss the impact of this later in the article.

There are two revenue flows into your superannuation account. The first is your contributions: 9.5% of your salary.

The second revenue flow is the interest earnings on your accumulated superannuation. This will be the earnings rate if the funds are invested in the stock market, as is the case with most superannuation funds.

The contribution that these two flows make is quite different.

While your contributions have remained stable at $5700 pa, however the interest earnings have risen to just below $52,000 in your final work year. This is because the interest on your account compounds giving the account exponential growth.

As a consequence of this growth, your accumulated super fund now holds just under $1.1 million

Withdrawing money for a home deposit

There is periodic discussion about allowing first-time buyers to draw on their superannuation for a deposit on their house.

This iteration of the model shows the impact of withdrawing $100,000 for a home deposit at the age of 32.

As a result, the accumulated superannuation at 65 has now dropped to $434,000, just over 1/4 of the final retirement total, had the withdraw not been.

Such a decline will have a profound impact on your final retirement superannuation payments.

The reason for this dramatic difference is that you go into the final high earning 10 years of your superannuation fund on a much lower base and, as a consequence, the earnings from interest are much lower.

What happens if the earnings rate from the stock market varies

This will make a huge difference to your accumulated superannuation when you retire.

If the simulation varies the returns over the period of investment, particularly in this case varying the rate above 5%, the outcome is quite marked.

Here is rate at which the market returned varies.

This represents an annual return of 9%, well within the range of the ASX 500 has been performing at over the last 20 years.

The impact of this variation, well above the 5% in the first simulation, is shown in the next graph.

The accumulated Super is now $3.4 million.

The size of accumulated superannuation funds, such as the one modelled here, raises some important questions about the nature and function of superannuation which will be discussed in a later article.