"2002 REPORT COMMISSIONED BY FED DEP FAMILIES & COMMUNITY SERVICES"'THE COMMUNITY'S MOST VALUABLE [HIDDEN] ASSET-' VOLUNTEERING IN AUSTRALIA 1.1 Policy Settings 1.2 Demand for Volunteers 1.3 International Year of the Volunteer 1.4 The Dollar Value of Volunteering 1.5 Debates about Social Capital and Civil Society 1.4 DOLLAR VALUE OF VOLUNTEERING Recent studies of the level of volunteer activity in Australia indicate that volunteers contribute significantly to the economy (Industry Commission, 1995; Australian Bureau of Statistics, 1996; Australian Council of Social Service (ACOSS), 1996;Ironmonger, 1998, 2000). It has been suggested that the value and volume of volunteer contribution should be included in the national accounts published quarterly by the Australian Bureau of Statistics (Ironmonger, 1998, 2000). Failure to recognise the economic value of volunteer work to the Australian economy has implications for evaluating policy alternatives and the social recognition of volunteer effort. Economists have suggested several methods of valuing volunteer activity which produce different results. One method involves measuring the replacement cost of the volunteer outputs at market prices of comparable goods and services. Another method suggested would value the opportunity cost of time spent in volunteer activity at a comparable market wage (Ironmonger, 1998, 2000). Both of these methods utilise a broad interpretation of volunteer activity, including formal volunteering through organisations, and informal volunteer activity in other households (Ironmonger, 2000). Ironmonger uses Australian Bureau of Statistics Time Use data to estimate the volume of volunteer work in a similar way to ascribing a value to unpaid household work. While it is difficult to put a dollar value on volunteer activity, Ironmonger estimated the gross value of volunteering activity to be $41 billion in 1997 using a dollar value of $17.10 per hour (Ironmonger, 2000). This amount includes both labour and capital costs, that is the use of volunteers vehicles and running costs in the value of volunteer time. Other estimates, based on different estimates of time and different valuation assumptions, produce lower estimates. Noble and Rogers (1998) use a simple method of multiplying volunteer hours worked by a set dollar value, for example, $12 per hour. They estimate that volunteering contributes about $5.2 million to the Australian economy each year. Brown (1999) also uses this costing method but suggests that estimations of the value of volunteer activity should include a broader spectrum of costs and benefits associated with volunteering. These include measuring the value of volunteering to recipients in various terms, including satisfaction, and the opportunity cost in terms of time that could have been spent in other ways. However, Ironmonger (2000) comments that there is no method available to provide a dollar value for the personal satisfaction, skills and social benefits gained by volunteers through their involvement in volunteering. To date, the most defensible estimate of the dollar value of volunteering in Australia is Ironmonger’s estimate. The economic value of volunteering is a prominent issue in Europe, where a Volunteer Investment and Value Audit (VIVA) has been implemented. The VIVA uses the replacement cost approach to analyse and measure activities, matching them to paid work and assigning a ‘shadow wage’. The ‘shadow wage’ represents the amount that an organisation would have to pay to employ people to do the work of volunteers. The VIVA quantifies and compares the investment that organisations make in their volunteers by valuing volunteer inputs (resources) in relation to the outputs (value of volunteer time). A study using the VIVA found that volunteers are cost effective in terms of the payback on expenditure (Gaskin, 1999).