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Funding for non-government community services in Victoria isn’t keeping pace with rising costs.
The Victorian Government has indexed funding at 2% p.a., but the real costs of service delivery are increasing by about 2.4%. Recent changes to the Superannuation Guarantee Levy (up 0.5% over recent years) have only made the situation worse.
The result is a real funding cut for community organisations, which now have less money to help Victoria’s most vulnerable and disadvantaged or plan for the future with certainty.
VCOSS wants a fair funding deal that recognises the real cost of providing services.
This funding should increase over time as the sector’s costs grow.
The Victorian Government’s Service Agreement sets out the key obligations, objectives, rights and responsibilities of organisation funded by the Department of Health & Human Services and the Department of Education & Training.
The agreement was updated in December 2015 and features significant changes, including:
VCOSS has serious concerns about ‘record ownership’ obligations in the Service Agreement.
Under existing arrangements the Department owns an organisation’s records that relate to the Service Agreement, including governance, client and other records.
Funded community organisations would rather they own these records with access given to the Department as required. Ownership by the Department often interferes with the relationship between the client and the organisation and limits an organisation’s independence.
VCOSS will continue to push for the removal of these clauses.
In February 2012, Fair Work Australia handed down an Equal Remuneration Order (ERO) that will increase wages for workers in the social and community services sector.
The decision recognises the historical under-payment of community service workers, and was rightly heralded as an important step toward achieving equal pay for workers in the sector.
But the ERO also has financial implications for organisations, which must now pay wage increases of between 23% and 41% over eight years, through to December 2019.
Funding for the wage increases has been included in Victorian Budget forward estimates from June 2015.
VCOSS will monitor funding commitments in this space to ensure community sector organisations are supported to deliver on these much needed wage increases.
Renewing the Service Agreement 2015-18
Principles underpinning a renewed Service Agreement
Professor Shergold’s report Service Sector Reform: A roadmap for community and human services reform (July 2013) recommended that the sector reform process be conducted on principles of:
The development of a revised Service Agreement should be conducted in accordance with these principles. In our view, the current review of the 2012-15 Service Agreement is an important opportunity to rethink and rearticulate the contractual relationship between government and funded organisations via new and more collaborative form(s) of agreement.
Without limiting our request for a redefined framework for agreement-making between government and the funded sector, we below are our key issues of concern with the current Service Agreement.
Main issues with the 2012-15 Service Agreement
The Service Agreement has been drafted with extensive rights and very broad discretion in favour of the Department. This approach is not in line with the principles mentioned above and the Victorian Government’s stated support for partnerships and shared governance with all publicly funded services. It is also legalistically drafted. A more balanced, plain language Agreement should be pursued for the 2015-18 period.
The significant subjective discretion afforded to the Department in the Service Agreement, as well as reference to vague standards, creates uncertainty for Organisations. For example in many clauses the terms ‘in the Department’s reasonable opinion’, ‘to the Department’s reasonable satisfaction’, ‘expected community standards’ or ‘ethical standards’ are used but not sufficiently defined. More objective measures are needed in many cases to ensure organisations understand (and can meet) appropriate standards, and fair processes which provide an organisation with a right of reply are required where performance is in dispute.
The clauses in the Service Agreement that provide the Department with a right to unilaterally withhold funding, vary, suspend, cease or terminate the Service Agreement are unfair, overly complex and inconsistently drafted. A simpler, fairer, more transparent process is required.
The current Service Agreement has clauses that do not appear to recognise that community organisations are independent entities with separate governance and legal requirements. For example, clauses requiring Organisations to hand over original records do not recognise organisations’ record-keeping requirements under incorporation, tax, charity and other laws. The 2015-18 Agreement should acknowledge and respect the sector’s independence, and reporting requirements should be streamlined with existing legal and regulatory obligations wherever possible to alleviate compliance burdens on Organisations.
Contact your local member of Parliament. Tell them the importance of fully funding the Equal Remuneration Order (ERO), providing appropriate funding indexation to meet rising costs and demand, and implementing a fairer Service Agreement for 2015-2018.
A template letter to MPs
A two page information paper for you to send with your letter
A detailed briefing paper to assist organisations in understanding the issues relating to the ERO, funding indexation and the Service Agreement.
Stay in touch! To help VCOSS in its advocacy on behalf of the sector we are keen for you to keep us informed about the feedback you are receiving.
Save the date: VCOSS is convening a meeting for member CEO’s and Presidents to meet senior government Ministers at Parliament House at 2pm on 14th April 2015 to advocate for the ERO, indexation and the service agreement. Please note this will be a member only event.