The McGowan Government will spend up to $60 million over four years to ensure the sustainability of the community services sector.
After consultation with the sector’s peak bodies, the State Government has committed to set aside the additional funding to ensure eligible providers can access funding needed to address the impact of higher wages under the Equal Remuneration Order (ERO).
Community Services Minister Simone McGurk wrote to the sector’s peak bodies on December 5 to advise them that up to $15 million in new funding would be available within this financial year, and encourage them to work with the Government. That funding was formally announced as part of this week’s Mid-year Review.
The community services sector is a key partner in the delivery of services for vulnerable Western Australians, as well as a significant contributor to economic growth, employment and community wellbeing.
The 2012 Fair Work Australia ERO provided for annual wage increases each December from 2012 to 2020 to lift the pay rates for human and community services employees. It was a key milestone in addressing unequal pay for women.
The ERO is a mandatory requirement for community sector organisations that pay staff under the relevant awards. While the ERO is welcomed, the sector has indicated that the wage increases for staff are impacting on the sustainability of many community service organisations.
Since 2011-12, funding supplementation has been provided to the sector to meet incremental wage increases.
This Government has been working closely with the sector to understand the issue and the ongoing impact of the order on current services.
The distribution mechanism to supplement contracts is being developed by the Departments of Communities, Finance and Treasury, in consultation with peak body representatives, with a focus on contracts that were established prior to the ERO.
A contract audit will also be undertaken by the Department of Finance, with line agencies updating their contractual information on Tenders WA to enable Government to better understand the investment in this space and support the identification of eligible contracts.
Work is ongoing with the sector to substantiate and respond to ERO impacts.
The State Government had already made progress in its work to address the ERO, having provided $1.9 million in 2019-20 to 24/7 organisations to support their round-the-clock wage costs.
Earlier this year, it also reversed the decision of the previous Government to change indexing for the sector under the Non-Government Human Service Sector (NGHSS) indexation policy, delivering a $30 million boost to community service organisations over four years.
In addition, not-for-profit contracts have been quarantined from all previous or current government savings measures, and have therefore continued to receive NGHSS indexation. This has resulted in year-on-year growth to community services expenditure since the ERO came into effect.
The State Government is committed to rectifying the sustainability issues for those providers with contracts that were established prior to the ERO that have not received supplementary funding. These providers are strongly encouraged to engage contract managers at their relevant government agency as early as possible.
As stated by Community Services Minister Simone McGurk:
“The State Government has approximately 1,500 community service contracts for services delivered by more than 400 non-government organisation providers.
“The community services sector is a valued partner in the delivery of services for vulnerable Western Australians, as well as a significant contributor to economic growth, employment and community wellbeing.
“Up to $60 million – or $15 million per year – has been allocated so that eligible organisations have the funds they need this financial year.
“Immediate relief is in sight, with additional funding available to flow quickly to community service providers that continue to work with us.”
As stated by Treasurer Ben Wyatt:
“The value of human and community service contracts has already grown from an estimated $1 billion in 2011-12 to an estimated current spend of $1.7 billion.
“The Government has been listening to and working with the sector to resolve this issue, and is committed to supporting community organisations by addressing the impact of the ERO.
“This is the next step in the government’s ongoing work to address issues associated with the 2012 Fair Work Australia Equal Remuneration Order.
“It will meet the immediate wage costs of the community service organisations most severely impacted by the ERO – those with Government contracts that predate the ERO.”
Community Services Minister’s office – 6552 6600
