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‘Devastating’ Social Service Funding Cuts Slammed

18 September 2015 at 12:00 pm
Xavier Smerdon
A Senate Inquiry has slammed the Department of Social Service funding process which saw cuts of $270 million and has recommended that five-year contracts be awarded to service providers to ensure stability.

Xavier Smerdon | 18 September 2015 at 12:00 pm


‘Devastating’ Social Service Funding Cuts Slammed
18 September 2015 at 12:00 pm

A Senate Inquiry has slammed the Department of Social Service funding process which saw cuts of $270 million and has recommended that five-year contracts be awarded to service providers to ensure stability.

A report by the inquiry into impact on service quality, efficiency and sustainability of recent Commonwealth community service tendering processes by the DSS found that the 2014 tendering process was “poorly planned, hurriedly implemented, and resulted in a loss of services”.

“The new broad-banded competitive tendering process was a reform of such magnitude as not to be seen by the community sector before. It was undertaken at the same time as the budget was cut by $240 million, followed by the MYEFO (Mid-year Economic and Fiscal Outlook) announcement of an additional cut, which in effect reduced the funding available by $270 million,” the report said.

“Instead of constructively engaging with the sector, the department throughout the process kept providers and peak bodies at a distance and the sector felt the department undervalued their expertise, experience and role. In addition, the process has damaged relationships between providers by pitting them against each other and engendered greater mistrust of the department.”

Earlier this year a Senate Estimates Committee hearing in Canberra was told that the DSS received 5,572 applications from welfare groups seeking $3.9 billion over four years when there was just $800 million available.

Following the announcement of the results of the tender process, gaps in service provision were identified. To address some of these gaps, the Government announced in April that $1.7 million would be provided to fill gaps in emergency relief. Then on 10 June a further $40 million was announced to address gaps in frontline services that had been identified.

Australia’s peak welfare body, the Australian Council of Social Service (ACOSS), welcomed the report and called the funding cuts within the DSS “devastating”.

“The Report confirms the community sector’s view that the Commonwealth tendering process of community services, following the Federal Budget in 2014, was the worst of its kind in living memory,” ACOSS CEO Cassandra Goldie said.

“During the Inquiry, Senators heard from one organisation after another about the myriad ways in which the tender process had failed: bad process and bad outcomes with devastating impacts. The Inquiry Report verifies that the extent of the cuts – totalling $270 million over four years – left many people, vulnerable and in need, without critical support and services around the country.

“ACOSS and many witnesses to the inquiry highlighted the department’s failure to identify and communicate areas of need prior to conducting the tender and develop a funding strategy that addressed key priorities. The Committee concluded that this was a major shortcoming leading to loss of services in areas around Australia, particularly in housing and homelessness and emergency relief.”

In a submission to the Inquiry, the DSS defended its practice of competitive tendering, claiming it would encourage innovative, collaborative applications and open up opportunities for service delivery from organisations that had not previously been considered.

The Senate Committee recommended that an urgent review be conducted of where critical service gaps continue to exist, that this review be made public and that these gaps be filled immediately to make sure that “very vulnerable” people get the support they need.

“An effective tendering round would have identified current and prospective service provision in localities across the country and put out tenders accordingly. It would also put an appropriate weighting on the skills and knowledge of community based or specialist providers have in assessing tenders. The results show this was either done poorly or not at all,” the report said.

“It is of little consolation to the sector that the department has sought to improve the process with an external review but did not engage with them. Further, the department has not sufficiently explained how it will amend its process to ensure that future funding allocations are more properly targeted.”

Liberal Senator and Deputy Chair of the Inquiry, Zed Seselja, tabled a dissenting report rejecting “the partisan, self-serving nature of the committee's interim and final reports”.

“The government is committed to dealing with the legacy of debt and deficit left by the Labor government and reform of the department's grants process is vital to that ongoing work,” Senator Seselja said.

Senator Seselja agreed that, where possible, five-year contracts should be given to service providers.

The full report can be found here.


Xavier Smerdon  |  Journalist  |  @XavierSmerdon

Xavier Smerdon is a journalist specialising in the Not for Profit sector. He writes breaking and investigative news articles.


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