The community sector is chronically underfunded by the Federal and ACT Governments, and many services and workers have been pushed to their limits, according to a survey released by the Australian Council of Social Service (ACOSS).

“Chronic under-funding of the sector by the Commonwealth Government and Territory Government is severely impacting the services that community sector organisations can offer and their ability to retain staff,” said Dr Emma Campbell, CEO of the ACT Council of Social Service (ACTCOSS).

 “We need action from all levels of Government. There is a reasonable fear among sector leaders that the situation will only get worse, without a change to policy settings.”

The ACT Government recognised that funding certainty was a key issue for the sector, said Rachel Stephen-Smith, ACT Minister for Health, and aimed to deliver longer-term funding arrangements to address gaps in services.

The report

The report Carrying the Costs of the Crisis was undertaken by UNSW Sydney for ACOSS and the State and Territory Councils of Social Service, including ACTCOSS. It surveyed thousands of community sector workers, service leaders (CEOs and senior managers), and frontline workers across the country.

According to the report, across Australia, only 20 per cent of community sector organisations said their main funding source covered the full costs of service delivery.

“In some areas of the survey, the ACT fared the worst,” Dr Campbell said.

In the ACT, half of leaders expected their financial position to worsen in 2022 – compared to only 29 per cent of leaders nationally.

ACT community sector leaders ‘seriously worried’

ACT community sector leaders quoted in the report painted a grim picture of their financial position.

“I’m seriously worried,” said the CEO of one ACT health-related service. “I don’t want to stand down staff because you put so much time and money into training them, and if you stand them down, they will leave, but keeping paying them through this round of lockdowns has almost depleted our retained earnings that we have spent 20 years saving.”

“Contracts are far too short for the sector, and affect the retention of staff and the planning of services,” said the CEO of another health-related service. “Contracts need to be longer in length and give room for more flexibility, such as innovation and responding to client need as it arises.”

“If you don’t operate in a ‘sexy’ area, there’s no fundraising/ philanthropic money,” said a third CEO of an ACT health-related service. “Government money is becoming tighter and harder to win, especially if you go in with a true cost (you only win tenders/grants now if you are under budget and then are prepared to wear the loss).”

“Businesses are struggling, therefore their capacity to sponsor and donate is constrained,” said the CEO of an ACT child, youth, and family service. “Also, fundraising events are being regularly cancelled or are not as effective (i.e. online versus in-person events).”

“COVID has placed massive strain on business, with 64 per cent reduction in income streams,” said another CEO of an ACT child, youth and family service.

The CEO of an ACT legal, advocacy or peak body said they saw “significant increases in costs through salary rises, IT requirements, superannuation contributions, and long service leave contributions – but funding is not keeping up”.

ACT community services under pressure

This survey follows an ACT-focused report, Counting the Costs, commissioned by ACTCOSS on behalf of the community sector and the ACT Government.

The report, released in February this year, showed that:

•           The annual indexation rate applied to funding was insufficient to cover rising costs

•           Nearly half of organisations incurred losses on ACT Government funded programs

•           To remain competitive, one in four organisations priced services below cost when tendering for contracts

•           Almost two thirds of organisations had decided not to apply for funds to deliver services because available funding was insufficient to cover costs

•           Demand for mental health services has doubled, yet funding for mental health services has not kept pace and the share of funding to community mental health services has decreased.

• Read more: Community services face financial pressures

ACTCOSS calls on governments to act

Dr Campbell said an incoming federal government should commit to provide adequate federal funding for services provided by the community sector, including aged care, disability, homelessness, and domestic violence services, and guarantee appropriate remuneration of the community sector workforce at regularly and adequately indexed rates.

She also called on the ACT Government to create a sustainable funding model for the sector, including reviewing the formula for calculating the indexation rate for community sector funding; to review all ACT funding agreements to ensure that costs of providing services were fully covered; to prioritise early intervention and prevention; and to boost funding for areas of high need, for example, where there were long waiting lists and clear evidence of significant and unmet demand.

“Community organisations should be able to rely on governments to fund them appropriately so they can provide quality services to all who need them and pay their workers fairly,” said Dr Campbell.

ACT Government response

The ACT Government recognised that funding certainty was a key issue for the sector, said Rachel Stephen-Smith, ACT Minister for Health.

“I have sought to be clear with all sectors that a key aim of the commissioning process is to deliver longer-term funding arrangements with built-in flexibility to innovate and address identified gaps in services.”

The 2021-22 ACT Budget, she remarked, included $4 million over four years to support an increase in community sector funding – reflecting the welcome increase in Award wages the Fair Work Commission determined last year.

This was in addition to additional funding directly into sectors that experienced high demand or other funding pressures during the pandemic, including the homelessness, domestic and family violence, and alcohol and other drug sectors.

“However, we understand that there is more to do,” Ms Stephen-Smith said.

The ACT Government had commissioned the Counting the Costs report jointly with ACTCOSS, and was carefully considering its findings and recommendations – particularly addressing indexation arrangements.

“The report is a valuable platform to build a joint understanding between the ACT Government and the sector on the true cost of service delivery,” Ms Stephen-Smith said.

ACT Government directorates and the community sector partners were working on a new way of collaboratively designing and procuring services through commissioning for outcomes.

“The Counting the Costs report will inform this process, and help us to work together to achieve our shared vision of a Canberra where everyone has the support they need to reach their full potential and participate in the community.

“Community sector organisations are an essential part of a flourishing Canberra, and we value their above-and-beyond efforts.”