Sustainable Funding and Service Viability in WA’s Community Services Sector Report 2025

This report presents the findings of the Western Australian Council of Social Service (WACOSS) Sustainable Funding Survey for 2025. In addition to the survey, this year’s analysis incorporates profit-and-loss statements from five organisations — spanning both metropolitan and regional service providers — covering a total of ten State Government-funded community service contracts. We extend our sincere thanks to the Chief Financial Officers of Ruah Community Services and Palmerston for their valued support in the financial analysis. Given the commercially sensitive nature of the data, this report presents aggregated, high-level findings only.

Now in its third iteration, the survey and accompanying case study review continue to monitor the structural and systemic challenges impacting the financial sustainability of Western Australia’s community services sector. The 2025 survey, conducted between August and September, received responses from 169 organisations, representing a diverse cross-section of service providers operating across both metropolitan and regional areas of the state. Key Findings include:

1. Structural underfunding remains entrenched There is continued and widespread failure of government contracts to meet the full cost of service delivery. Analysis of ten profit-and-loss statements revealed that seven out of 10 contracts are operating at a loss, with one contract recording a deficit exceeding $1.2 million. Even excluding this outlier, the average loss per contract was approximately $81,000. This underfunding is eroding service quality and capacity across the sector.
2. Wage costs dominate budgets, leaving little flexibility On average, 66 per cent of income is spent on direct wages, with some contracts allocating over 85 per cent to staffing. This high wage dependency reflects the labour-intensive nature of the sector but leaves minimal room for operational costs, innovation or contingency. The complexity of the Social, Community, Home Care and Disability Services Industry Award (SCHADS) and lack of funding for redundancy, supervision and professional development further compound workforce sustainability risks.
3. Regional inequity persists Survey responses and financial data confirm that regional organisations continue to experience more acute underfunding than their metropolitan counterparts. This inequity results in reduced service availability, higher workforce turnover and greater reliance on cross-subsidisation or service contraction in regional areas. Notably, 70 per cent of survey respondents reported that they subsidise housing for regional staff — an essential measure to attract and retain workers in high-cost or remote locations. However, only 1 per cent indicated that these housing costs are formally recognised or funded within their State Government contracts. This disconnect places additional financial strain on regional services and further entrenches inequity in workforce sustainability and service delivery.
4. Operational costs are rising and underfunded Operational costs now average 45 per cent of income across the 10 case study contracts. Key cost drivers include indirect workforce management fees (ranging from 0 per cent to 23 per cent), cyber security, IT infrastructure, maintenance and compliance. Notably, no contracts included depreciation, undermining long-term asset sustainability.
5. Contracting practices remain unchanged Despite the implementation of the WA State Commissioning Strategy, 93 per cent of survey respondents reported no material improvement in contracting arrangements. Most contracts remain short-term, with an average of eight extensions, and many are over a decade old. This undermines planning, workforce stability and service continuity.
6. Indexation formula still inadequate The current CPI/WPI-based indexation model continues to fall short of covering real cost increases. 74 per cent of respondents support a revised formula.
7. Historical underfunding requires urgent rectification There is strong sector consensus that a base funding uplift is needed to address the cumulative impact of historical underfunding. The sector supports a model similar to the 27 per cent uplift recently provided to homelessness services, applied more broadly across all State Government-funded contracts.
8. Gender equity challenges are deepening The 2025 survey highlights the gendered impact of funding shortfalls across the community services sector. With over 78 per cent of the workforce identifying as women, reductions in hours, insecure contracts, and limited access to entitlements disproportionately affect female. Over the past year, 61 per cent of organisations reported cutting employee hours due to rising award conditions and inadequate indexation, while over half reducing services. These conditions reinforce the gender pay gap and undermine women’s economic security — particularly in regional areas where housing costs are high and subsidies are unfunded. The sector continues to call for urgent reform, including funding to support gender-equity workplace policies and full implementation of Fair Work Commission wage equity decisions.

As reported in 2024, the findings reaffirm that service sustainability is at risk, forcing providers to adopt defensive measures — such as cutting staff hours, reducing services, or drawing on reserves — simply to keep essential programs running.