New Report Highlights Financial Pressures on Community Services Sector
New research by South Australian Council of Social Service shows that funding for community services is not keeping pace with the costs of service provision, further risking cuts to vital services and organisational sustainability.
SACOSS’s Indexation for the SA Not-for-Profit Sector report shows that the state government’s indexation funding rate is the second-lowest in the country this year.
The South Australian government funds community services such as homelessness services, youth and mental health supports, community centres and programs, and domestic and family violence services. That funding is increased annually with indexation designed to maintain the real value of funds in the face of rising costs, but the SACOSS report shows that the current indexation rate is inadequate.
Increases in award wages, the superannuation guarantee levy, and additional costs associated with the introduction of portable long service leave have pushed wage costs well beyond the annual indexation rate, while services also have to deal with other cost increases like rent and insurance. These cost increases also come at a time of high community need and demand for services.
Key Findings
- The South Australian government indexation rate of 2.5% is the second lowest in the country this year
- Community sector organisations have seen a loss of 3.6% of the value of funding over the past 4 years
- If no supplementary indexation is provided in the Mid-Year Budget Review, sector organisations face a further loss of 1% of funding value
- For every $1m of expenditure, an average community service organisation faces additional costs of $41,000, with indexation only covering $25,000 of these costs.
Key Recommendations
The primary recommendation of the SACOSS report is that in the Mid-Year Budget Review in December, the state government provide a minimum 1% indexation supplementation plus an extra increment as a step towards addressing the shortfall in previous years, alongside a rebate for the additional costs of the portable long service leave scheme.
If there is no rebate for additional portable long service leave costs, a minimum of 1.8% indexation (plus an increment to address the previous shortfall) will be required.
The SACOSS report was released at SACOSS’ Vital Support: Community Sector Funding and Workforce Conference at the Adelaide Convention Centre today, and is downloadable here.
Quotes attributable to Dr Catherine Earl, SACOSS CEO
Community sector organisations are very efficient and make limited budgets stretch a long way – but unlike businesses they cannot cover costs by increasing prices.
As a sector, we are at a point where we can’t sustain the continuing erosion in the value of government funding. We have seen two long-standing disability service providers go into administration this year, and I am fearful we will see more services lost if the funding issues aren’t addressed.
Our report quantifies the gap between funding and increasing costs, and makes clear recommendations to properly fund vital community services.
Our sector organisations support some of the poorest and most vulnerable South Australians and provide services on behalf of government, so the government really has to put up the money to cover increasing costs because no one wants to see services cut.