NSW Out-of-Home Care Strategy

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Thank you, Lauren, and thank you all for everyone joining us today. We are in the lands of the Gadigal people,

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and I want to acknowledge the traditional custodians of these lands and the lands where you have all come from to be here today.

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I extend my respect,

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pay my respect to elders past and present and extend that respect to all Aboriginal people who are joining us here today.

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As you all know,

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reforming the out-of-home care system is an absolute priority for the New South Wales Government.

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And I really do appreciate your willingness to be here today to hear about the government's next steps in building

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a world-class system that protects kids and supports families.

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And I do want to acknowledge that these reforms are going to mean significant change for your organisations. So out of respect to you all,

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we wanted to share our plans with you first. As of today,

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I have been the Minister for Families and Communities for two years, 10 months and 22 days. But who's counting?

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Although I suspect some in the room may well be. Over that time,

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the government has been open and honest about the many challenges facing this sector.

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I want to ground today's conversation in an observation made in the system review into out-of-home care that I wholeheartedly agree with.

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It said,

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there are some pockets of excellence across different service providers and DCJ districts.

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There are effective and innovative services delivered by many dedicated people,

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carers and organisations who are doing their best to make positive difference in the lives of children, young people,

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families and communities. These service providers have strong leadership, relationships and local partnerships in place.

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They are committed to accountability and transparency and have created strong results-driven cultures, permeating from top down.

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They have implemented trauma-informed care models with robust operating systems.

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They have wrap-around services for children and carers and have fostered workplace cultures that prioritise outcomes,

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child voice, carer representation, as well as having a supported, engaged workforce.

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This finding resonated with me deeply.

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It reflected the incredible work that I have witnessed with some providers and above all,

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it reinforced that building a world-class out-of-home care system is possible. It showed that,

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despite the challenge of the system we have all inherited, exceptional work is not only possible, it's happening.

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Now,

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I'm not going to spend today running a pop quiz on the system review because I know people have read it back to front, sometimes twice. But as you would all know,

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in summary it found that the out-of-home care system is characterised by a profound lack of accountability and ineffective oversight.

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A system founded on flawed assumptions and an incorrect cost basis,

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resulting in a hybrid model largely devoid of robust evidence-based practices and sound fiscal architecture.

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It was a brutal assessment of how we collectively are failing to deliver an accountable system of support for some of our most vulnerable members in our communities.

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In fact, since I became minister,

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brutal assessments have been landing on my desk with uncomfortable regularity, from the Ombudsman,

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Auditor General, Advocate for Children and Young People, and tragically, the Coroner. Today,

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we will be walking you through the government's reforms to address these issues. This reform demands honesty about what is working,

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what is not and what must change. As Minister, my job is to find solutions, lift performance,

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strengthen accountability and ensure public value.

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I have seen a deep commitment to these goals within DCJ and right across the sector, but regretfully,

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the commitment itself hasn't translated into increased rates of restoration outcomes, placement stability,

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culturally responsive care,

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or positive long-term well-being outcomes that children in out-of-home care in New South Wales have every right to expect.

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That's why we're here today, to acknowledge the challenges openly, to set a new direction,

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and to ensure this strategy is the beginning of a transformation that delivers real and lasting change for families.

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The New South Wales Government holds ultimate responsibility for children in care. That responsibility cannot be outsourced.

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Providers act on behalf of the state,

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but the community expects the minister and the department to steward the system with clear responsibilities, transparent oversight,

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and consequences when expectations are not met. This strategy restores our stewardship,

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clarifies system roles and strengthens the architecture for accountability and service quality.

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Our reform is a deliberate government-led response to persistent challenges highlighted by multiple reviews and inquiries, such as low restoration rates,

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a lack of carer support, unsuitable emergency arrangements, inconsistent service quality and outcomes,

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and weak system stewardship and accountability. Our reforms are not and will not be sector-led.

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The government is rebuilding our system architecture to ensure a safe,

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transparent and outcomes-driven program that children can trust and the public can be confident in funding.

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We are reforming so that government can confidently invest in outcomes and deploy more resources into evidence-based

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supports that help more children return home safely and strengthen earlier interventions for families so fewer children need to enter care in the first place.

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I want to be direct about the problems I've seen across the sector and our commissioning settings. Mostly, these issues are not about individual workers or organisations,

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they are about systems, governance and culture.

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We are not achieving the restoration and guardianship outcomes that children deserve, despite significant additional investment.

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We also need to acknowledge that the flexible packaged contracting model didn't lead to improved positive outcomes for children.

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Instead,

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it obscured accountability for government and allowed some providers to deliver inconsistent and ineffective services while claiming increasing taxpayer dollars.

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You'll see this morning that sadly it also allowed the redirection of funding away from vulnerable children and

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towards the financial interests of individuals and providers.

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This slide demonstrates the significant additional investment made by the people of New South Wales into the out-of-home care program under the PSP.

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We are now funding more than a billion dollars each year into your services. That number has consistently and substantially grown,

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despite the number of children in the system stabilising and falling in recent years.

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You can see that the average PSP funding per child has now grown to be approximately $130,000 per year,

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largely driven by high-cost emergency arrangements and an increasing prevalence of additional funding applications to the department.

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For a large part of last year,

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I tasked the department to analyse every provider's income and expenditure statements that you submit every year.

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It may surprise you to know that previously the department didn't track your year-on-year expenditure in a centralised way.

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Instead, it was managed at a local partnership level.

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Pulling together the trends in expenditure across the sector since the introduction of the PSP has been an eye-opening experience.

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What it shows is that the sector is spending more and more on administrative and staffing costs and less and less on direct services to children in your care.

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It shows that corporate management fees are soaking up too much of this program.

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It shows that some providers exhaust the entirety of their packaged funds on their own operating costs and then

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require additional funds from government for any needs of the child.

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This is clearly unreasonable and unnecessary and some might say unethical,

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given the vast majority of financially viable providers do not behave this way. Staff costs have dramatically increased,

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but outcomes and direct support have not commensurately improved.

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This indicates that the current investment in casework heavy activity and exceptionally low caseloads is not working for the children and carers for whom this program is meant to support.

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Permanency goals are all going backwards. Rates of restoration, guardianship and adoptions continue to decline. So in summary,

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the costs of the program are increasing despite the number of children decreasing.

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Funding is increasingly flowing to administrative and staffing costs instead of direct supports for children and carers.

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And the goals of the program are not being achieved. This is the situation before me as minister.

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And I'm committed to making this significant investment work better. But I'm worried about more than just financials.

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There are cultural issues within the out-of-home care program that must be addressed urgently. For instance,

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I've heard from far too many carers about far too many interactions that are disrespectful and even hostile.

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And it's simply not acceptable. Without carers, we have no out-of-home care program. I know everyone in the room understands that,

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but I've honestly been shocked by the consistency and frequency of carer feedback about poor practice.

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We need to treat carers with the respect they deserve. And of course,

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this is a message I've delivered strongly to the department as well.

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We've seen shocking delays in reportable conduct investigations and in carer reviews, which undermine safety and confidence in the system.

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There have been persistent governance weaknesses, boards without the necessary capability,

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ineffective financial controls and risk and probity oversight that has not met the standard required for a program of this scale, risk and importance.

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In too many cases,

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we faced combative attitudes towards the department that have served to slow down solutions and added unnecessary stress and cost to the system.

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There are also very troubling examples of financial arrangements that have seen public money redirected away from vulnerable children.

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I'm going to provide a number of examples so you can all appreciate the issues that we are grappling with across the system.

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We have seen a property investment scheme set up to benefit staff, which guaranteed 20% markup on rents,

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and saw landlord costs charged to the taxpayers of New South Wales instead.

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If this was allowed to occur across the residential care sector,

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we expect it would redirect up to $6.5 million away from vulnerable children every year.

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We've seen motor vehicle leasing schemes set up that charge DCJ up to 120% of the value of the car,

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but DCJ doesn't end up owning the car. So when it's sold, the provider makes a significant windfall profit.

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If this was allowed to occur across the sector,

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we expect it would redirect up to $13 million away from vulnerable children every year.

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We've seen a provider take $80,000 PSP packages and then set artificial $3,000 caps on services for the children in their care.

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If this was allowed to occur across the sector,

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we expect it would redirect up to $27 million away from vulnerable children every year.

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We've seen a provider extract corporate management fees that were seven times more than their actual corporate management expenses.

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If this was allowed to occur across the sector,

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we expect it would redirect up to $54 million away from vulnerable children every year.

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We've seen providers use taxpayer funds to purchase properties without DCJ approval and then seek to avoid the taxpayer interest being listed on the title.

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If every PSP provider purchased just one property in this way,

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we expect it would redirect up to $19 million away from vulnerable children. And across the sector,

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we consistently see organisations charge corporate management fees and then refer to these same funds as organisational funds or non-DCJ funds,

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as if moving money from one bank account to a different bank account negates public spending accountability. If this was allowed to occur across the sector,

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we expect it would redirect at least $50 million away from vulnerable children every year.

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I hope this gives a sense of the scale of the issues we have uncovered.

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If these behaviours were allowed to occur across the sector,

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we would see hundreds of millions of dollars being redirected away from vulnerable children every year. And I hold the sector to the same standard.

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I hold my own department because we are all caring for the children in my parental responsibility.

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So I'm asking everyone to examine shortcomings with honesty, confront challenges with courage,

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and address them with urgency and integrity.

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These examples show that the current model of partnership has not always facilitated good faith acting,

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nor has it ensured public funds are always being spent reasonably.

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These kinds of schemes will be ceased and a zero-tolerance approach implemented. As you all know, we haven't been standing still.

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There has already been a lot of change in the last two years.

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We've taken decisive action to stabilise the out-of-home care program and put children's safety first.

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One of the first things we did was end the use of alternative care arrangements.

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Children in New South Wales are no longer placed in motels and hotels with rotating shift workers from unaccredited agencies.

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That practice has stopped.

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We've also driven down the use of all high-cost emergency arrangements by 35% across the state,

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with some districts more than halving their reliance on them. At the same time,

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intensive therapeutic care has been expanded from 648 to 800 placements,

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including the first Aboriginal community-controlled ITC provider in New South Wales, a major milestone.

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DCJ is once again actively recruiting all types of carers to rebuild a stable, integrated carer pool.

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DCJ is employing family time workers rather than outsourcing this function to support family connection and restoration.

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There are over 300 new roles with 10% of these positions already filled by Aboriginal staff against a target of 20%.

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We've opened five new government-run residential homes, the Waratah Care Cottages, in Greater Western Sydney with more on the way.

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Importantly, we've backed this work with real investment, a $1.2 billion child protection package,

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including a 20% increase in the base foster care allowance, which has already commenced and is flowing to carers,

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and workforce measures to stabilise and support the frontline. Crucially,

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the budget package guarantees increasing investment in the out-of-home care program overall. Whilst this has all been happening,

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we've also been cleaning up our own house, tackling persistent cultural,

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organisational and practice issues to strengthen our own service.

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These are all practical actions demonstrating our government's goal to rebuild a system that provides safety and stability for vulnerable children.

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And these are early steps that show just how much change can happen when decisions are driven by the needs of children and not by the system's habits or self-interest.

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I want to speak briefly about how this reform will unfold.

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The government's out-of-home care strategy sets out a clear and staged approach to service design,

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commissioning and implementation so that the system remains stable while changes take place. First,

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we'll be winding down the permanency support program.

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PSP has helped create improvements in practice in some areas,

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but the evidence is clear that it cannot deliver the system-wide outcomes children need.

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Frankly, it has cost a lot more, but delivered worse outcomes. Every single permanency measure has gone backwards,

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which is simply not sustainable. As we transition out of PSP,

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we will be taking a phased approach to implementing a new out-of-home care program through redesigning each service stream.

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This sequencing is deliberate. It will provide stability for children and carers.

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It will support providers through change and will enable DCJ to build the capability needed to lead the redesigned system.

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At a high level,

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the redesign will begin with home-based care and restoration implemented by mid-2028.

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A new residential care service stream will then be in place by mid-2029 with a focus on reshaping residential care models,

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strengthening the specialist workforce and ensuring settings are safe,

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consistent and therapeutic for children with higher and more complex needs. Specialist aftercare will be redesigned by mid-2030,

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following an evaluation of the effectiveness and outcomes of current aftercare supports,

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and will focus on how we can provide continuity for young people transitioning to adulthood.

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Paul O'Reilly will walk you through this sequencing and provide more detail on timeframes shortly.

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We are introducing a new system design framework to match the best fit provider to each role and location,

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whether that be DCJ, an ACCO or an NGO.

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Decisions about who delivers services and where will be guided by structured criteria.

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Value for money, alignment to need, strategic fit, sustainability, performance,

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collaboration and commitment to transparency and public value. Implementation will factor delivery risk,

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complexity and workforce capability, as well as local market conditions.

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The new system design framework will determine who should do what, where and for whom.

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It will be central in guiding commissioning and where necessary, orderly exits. To safeguard continuity while we rebuild,

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the government will offer 12-month extensions for home-based care and 24-month contract extensions for residential care providers.

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These will be subject to contract variations that embed new accountability and transparency settings. Extensions will not be automatic.

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They will depend on providers agreeing to new accountability settings.

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A small number of providers will not be offered contract extensions where there is significant evidence of underperformance,

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questionable conduct or maladministration.

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This is a necessary part of stewardship when child safety and public value are paramount.

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We are committed to working with providers who are willing to work with us.

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Paul O'Reilly will further outline how contract extensions and the system design framework relate across the out-of-home care program.

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Now let me be very clear about what partnership means under this reform.

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The new out-of-home care strategy sets out a different way of working, one built on clear roles, clear responsibilities and clear accountability.

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For too long, ambiguity in the system has blurred, has allowed accountability to blur.

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Responsibilities were shared in name but dispersed in practice.

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And no one could confidently say who was responsible for delivering outcomes. That must end.

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Government is stepping into its stewardship role with clarity and confidence. We will set the strategic direction.

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We will make commissioning decisions.

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We will determine the policy settings and the service mix required to meet the needs of children. We will listen and engage deeply with the sector.

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But we will not hand over accountability for outcomes that law places squarely on the government.

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This is not a co-design process.

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It is a government-led reform where our partners have a vital and respected role. However,

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the ultimate responsibility for delivering better outcomes for children sits with the state and we will exercise that responsibility confidently, carefully and transparently.

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Partnership in this new model means meeting clear, consistent expectations. It means responding to performance issues quickly,

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not defensively.

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It means engaging constructively with oversight and quality assurance. It means demonstrating capability,

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financial stewardship and practice leadership that matches the scale and sensitivity of this work. And it means understanding that when public money,

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public trust and children's safety are at stake, accountability is not negotiable.

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That starts with governance. Boards must lead with rigour and maturity.

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I expect boards to have a direct line of sight to practice quality, strong financial controls, timely handling of reportable conduct matters,

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and risk management that reflects program realities rather than shallow idealism or the optimism of best case scenarios.

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If your board cannot demonstrate that capability now, it's your responsibility to address it quickly.

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Effective governance is a threshold requirement in out-of-home care. Let me also speak specifically to our ACCO partners.

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Aboriginal community-controlled organisations are central to achieving better outcomes for Aboriginal children.

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So this strategy commits to expanding Aboriginal delivered care. Aboriginal children,

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families and communities want it and need it and the evidence shows it works. But growth must be matched with support,

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capability and the same clarity of expectations,

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oversight and accountability that applies across the system. No organisation is exempt from accountability.

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What matters is safety, quality and outcomes for children. Of course, we will want Aboriginal children, families,

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communities and ACCOs to help shape the design of the programs that will be delivered in our reformed system,

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just as we did with the new Aboriginal family preservation program.

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But the overarching systems of accountability and transparency are non-negotiable. To our colleagues from oversight and regulatory bodies,

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your scrutiny matters. It has helped build the case for change, it has mapped a path for the future,

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and it will help keep us honest as we implement. Our frameworks will make monitoring clearer and faster.

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Our contracts will make consequences more predictable.

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I want a sector where independent scrutiny is welcomed because we are confident in our practice and open about our performance.

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When I talk about partnership and accountability,

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I'm talking about a shared commitment to what good looks like. At its heart, good practice means putting children's outcomes first.

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It means asking every single day, are more children being safely restored? Are their care environments stable,

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therapeutic and healing? Are placements protecting identity, culture and relationships? And just as importantly,

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are children visible in our outcomes reporting or are they buried under activity measures and output counts that tell

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us nothing about whether their lives are actually getting any better?

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Good partnership also means putting public value before private interest. This is a publicly funded system serving a public purpose.

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Resources must be demonstrably reaching children and carers. It means conflicts of interest are declared and managed.

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It means transparency with DCJ in data and finances and corporate behaviour that reflects a taxpayer-funded mission, not a private enterprise model.

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Accountability and transparency cannot be optional when children's safety and public trust are involved.

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And finally, good partnership means choosing collaboration, over posturing. When DCJ sets policy,

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accountability settings or commissioning directions, the question is whether you lean in. When things go wrong and in a system this complex,

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they will go wrong. Can you bring solutions or only resistance? This is what good looks like.

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These are the standards we will hold to ourselves in government and the standards we expect of our partners as well.

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Let me turn quickly to how the service system itself will be reshaped.

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We will maintain a hybrid model of service delivery across DCJ, ACCOs and NGOs,

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but with much clearer roles so capability is aligned to the needs of children and young people, government priorities and national commitments,

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and the strengths and capabilities of respective provider types.

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Government will take on the functions that require statutory authority, stronger oversight or specialist capability.

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DCJ will lead carer recruitment,

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retain responsibility for matters before the court and will now take the lead on managing specialist and therapeutic

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supports for children with more complex needs in home-based care.

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These are the areas where government must have direct line of sight and responsibility.

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Non-government organisations will focus service delivery on long-term home-based care for children with lower support needs.

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This is where our analysis has shown that many providers perform strongest, delivering stability,

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belonging and sustained relationships over the long term.

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Aboriginal community controlled organisations will continue to grow as preferred providers for Aboriginal children.

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If an ACCO is unable to care for a child,

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DCJ will provide case management so we can finally stop the cycle of slow and painful transitions.

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Carer choice will be respected and providers will be expected to build supportive and meaningful relationships with carers.

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We will work through the exact policy settings, but in the new out-of-home care program,

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all carers will be able to apply to DCJ to move to another provider if they genuinely aren't getting the support that they need.

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29 minutes, 7 seconds

We are reshaping the system around the needs of kids, carers and families and ensuring that all providers,

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29 minutes, 14 seconds

DCJ included, stop, reflect and rethink how we operate.

29:21

29 minutes, 21 seconds

You'll hear next from Paul O'Reilly on the out-of-home care strategy, the system design framework,

29:26

29 minutes, 26 seconds

including how the contract extensions will operate alongside program redesign and what that means in practice.

29:34

29 minutes, 34 seconds

The system transformation sequencing is intentional. Stabilise, rebuild, invest.

29:41

29 minutes, 41 seconds

So we protect children and carers during change and build the capability to sustain improvements.

29:49

29 minutes, 49 seconds

I became minister knowing that this would be the most meaningful and difficult job I had ever undertaken.

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29 minutes, 56 seconds

The responsibility we share is to ensure no child is lost in our systems,

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30 minutes, 1 second

that every child is valued and that every decision serves their safety, identity and future.

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30 minutes, 9 seconds

We will not fix everything overnight, but we will fix the settings we control.

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30 minutes, 15 seconds

We will insist on accountability where public money is spent,

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30 minutes, 20 seconds

and we will back carers and workers who do the right thing every day. If we do this well together, more children will go home safely.

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30 minutes, 29 seconds

More carers will come forward and stay. More kids will grow up with love, safety and stability.

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30 minutes, 37 seconds

Fewer young people will cycle through crisis and public trust will grow. That is what this strategy is for.

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30 minutes, 47 seconds

That is what our stewardship demands. Thank you.