Organisations that receive government funding to deliver critical community services including child protection and family violence support are at risk of corruption, Victoria’s anti-corruption commission says.

A report by the Independent Broad-based Anti-Corruption Commission  (IBAC) looked at Community Service Organisations (CSOs) funded through the Department of Families, Fairness and Housing as well as the health department.

Services provided included drug and alcohol services; aged care; social housing; homelessness child and family services; services for Indigenous, multicultural and LGBTQI communities and NDIS/disability support.

“These departments need to strengthen their oversight, governance and support of CSOs, helping them to build their capacity to prevent corruption and ensure public funds are spent appropriately,” Commissioner Robert Redlich said.

Vulnerabilities in oversight

He found procurement and contract management, conflicts of interest, ‘double dipping’, inaccurate reporting and misuse of sensitive information were key risks.

The report also identified “persistent vulnerabilities” in the oversight of services by departments and boards, regulatory duplication, and gaps in governance and corruption prevention frameworks.

“CSOs play a critical role in delivering human services on behalf of the Victorian government,” Commissioner Redlich said.

“The impacts of corruption are far reaching, particularly when it results in the waste of public funds and has the potential to jeopardise services delivered to vulnerable people and communities.”

Contracting community services

The report comes amid a shift by governments around Australia and internationally to outsource human service rather than provide them directly.

IBAC says many CSOs are now substantially dependent on government funding and many lack the resources to invest in governance and corruption prevention.

Competition for funding can also increase the risk of corruption by causing organisations to misreport service delivery, or to provide different services to what’s in their contract.

‘A persistent dilemma for government is how to achieve appropriate accountability for the expenditure of taxpayer funds and to protect the interests of clients, without creating undesirable bureaucratic rigidity.’

Robert Redlish

“A persistent dilemma for government is how to achieve appropriate accountability for the expenditure of taxpayer funds and to protect the interests of clients, without creating undesirable bureaucratic rigidity within NFP organisations which have traditionally prided themselves on a nimble and responsive approach to service delivery,” the report says.

“However increased scrutiny is important to ensure public accountability for the use of ever-increasing amounts of public funds, and to safeguard the vital interests and wellbeing of clients, many of whom experience vulnerability.”

The IBAC report didn’t look at the incidence of corruption.

However, a 2021 position paper by the NSW ICAC found cases of CSOs and CSO staff using government money and resources for their own benefit, obtaining funding for one service from multiple programs and delaying capital works to earn interest on funding.

IBAC says it has assessed 28 cases involving 109 allegations against CSOs since 2013, but says this is probably a case of under-reporting.