Claims of double-charging and excessive rent in NSW child protection system

Out-of-home care in NSW has been left open to questionable financial dealings by non-government providers, including double-charging and excessive rents, according to a sweeping review of the $2 billion service.

Prompted by stinging criticism of child protection in the state, the review described the care set-up as “not fit for purpose”. It identified “a profound lack of accountability and ineffective oversight” by the Department of Communities and Justice that led to potential profiteering.

A scathing review of NSW’s out-of-home-care system has found it is “not fit for purpose”.Credit: Angela Wylie

The co-reviewers, former NSW Police assistant commissioner Gelina Talbot and Lauren Dean, a former executive in the Department of Communities and Justice, made 13 recommendations to remedy weak governance and a lack of oversight.

These failures had allowed some non-government entities to engage in highly questionable practices, which are under further investigation by the DCJ.

In one case subject to a separate investigation by the department, the review found evidence an NGO had established a real estate investment scheme for its directors that potentially allowed them to personally profit from taxpayer funding.

In this scheme, real estate owned by the directors was leased to the provider at above-market rent, with the costs potentially passed on to the government via service contracts.

The scheme “may suggest that key individuals may be benefiting financially from the services provided by DCJ and the NSW government”, the report stated.

In other cases, the review raised concerns that some non-government providers had created “for-profit” legal entities within their business structure, allowing them to subcontract services to themselves at inflated costs.

It also found evidence that some providers may be double-charging taxpayers for services.

At the heart of the issue, the review found, was “weak governance” with a “lack of clarity in contract and fiscal management” and “inadequate program oversight”.

The department pays NGOs using taxpayer funds to fulfil much of its children protection services. The review found some service providers believed the relationship should be “based on ‘blind trust’.”

On the other hand, the reviewers said, there were examples of “a general reluctance by DCJ contract managers and districts to enforce compliance among service providers”.

Families and Communities Minister Kate Washington said the review showed that “taxpayer money is not always flowing to the children who need it”.

“The Minns Labor government has been open and honest about the spiralling out-of-home care system we inherited,” she said.

“Now we have the evidence and the recommendations we need to start turning the ship around so that vulnerable children and young people get the support they need.”

The review was launched after the Advocate for Children and Young People published harrowing accounts from children in out-of-home-care which described children as young as 12 being sexually assaulted and exposed to rampant drug use while in emergency accommodation.

The government has since said it would ban those arrangements by March.

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