NFPs Driving WA Economy, Report Says

Social services must no longer be seen as a drain on the public purse, according to the peak body for the social service sector in Western Australia, in light of a new report which shows the not-for-profit sector is a key driver of the state economy.

The WA Not-for-profit Landscape Report, released by the Western Australian Council of Social Service on Tuesday, found the WA charities sector has an annual revenue of around $12.7 billion and is a key employer having a major impact on the state’s economy.

According to the report, the sector employs 7 per cent of the state’s workforce – three times as many workers as agriculture, forestry and fishing combined, and just behind manufacturing (at 7.4 per cent) and mining (at 8 per cent).

WACOSS CEO Louise Giolitto told Pro Bono News “we need to stop seeing our social services as a drain on the economy and the public purse”.

“Investment by government in our sector is an investment in our state’s economic health,” Giolitto said.

“The annual revenue of the sector is around $12.7 billion, with $6.7 billion put into annual employee expenses. With the sector’s wages typically spent locally, they make a significant contribution to the WA economy.

“Our organisations may not have profit as their purpose, but the economic impact of the charity sector must now be acknowledged alongside its social benefits.”

According to the report, which was was researched and written by Penny Knight and Professor David Gilchrist from Curtin University’s Not-for-profit Initiative, there were approximately 4,636 WA based charities registered with the ACNC and a further 2,715 charities located in other states that report that they operate in WA.

The report also estimated there were at least an additional 1,000 “economically significant” NFPs with their head office in WA.

It found nationally, the NFP sector had been expanding faster than the Australian economy, growing approximately 3.2 per cent per annum against GDP growth of 2.9 per cent.

In WA, the Gross State Product grew by 1.9 per cent in 2015-16 and growth is expected to be 1.25 per cent in 2016-17.

More than half of charities made a profit, one in five made a loss and a quarter broke even.

Meanwhile the sector raised 59 per cent of its income from its own sources.

Giolitto said the report, the first of it’s kind for WA, provided vital evidence to showcase the contribution the sector makes.

“When we were speaking and negotiating with government, about the economic significance of the community services and not for profit sector, we never had the basis of evidence,” she said.

“That is why this report is absolutely imperative. Now we have that evidence base of how important our sector is for the government.

“It is [also] a bit about helping us to stand a more proud, or stand higher, now that they [the sector] actually understand the importance of their business.”

Giolitto said the community services sector provided essential services across a wide cross-section of the population.  

“Most Western Australians will have used services provided by charities at some point in their lives,” she said.

“The programs and services provided by charities are not only essential to tackle the growing levels of inequality and disadvantage in our community; they are themselves one of the pillars of the WA economy.”

Off the back of the findings, WACOSS has made a number of recommendations:

• Government should recognise and acknowledge the economic significance of the sector in its analysis of the WA economy and in its planning and investment for the future.
• In recognition of its economic and social significance, government should significantly increase its investment in capacity building and skills development in the sector.
• With nearly half of agencies not making a profit during this period, the sector itself has to develop more effective strategies to ensure its sustainability, including true cost accounting when quoting to provide services.
• The sector and government should recognise that the sector diversity highlighted in this report is a great strength, and that small, medium and big not for profits make important contributions to the wellbeing of all West Australians.

“There are several key recommendations WACOSS put in this, in regards to what we’re hoping and wanting, not just from government but also from the community service sector and I think the community abroad, about raising awareness and how significantly important we are and the impact we have on the community and the economy,” Giolitto said.

“For example, one of the key recommendations, or key piece of data that is in that report was that more than 50 per cent of the revenue raised in the community from the not-for-profit sector does not come from government sources or government contracts.

“One of the views that we are actually trying to change and change the language around, is in regard to if a business has a contract with government, it is not seen as a grant or as giving to the community, it is actually seen as a contract, to build a road or to build a building.

“We want the same sort of respect given to the community service sector.

“That these are contacts for services that government are required to provide and they have a contract with the community service sector and that we build the economy just as other industries do.”

Giolitto said a key factor of the report was in relation to capacity building in response to the needs of the sector and in particular with regards to changes to the NDIS and more individualised funding.

“Looking to the future, health and community services is one of the strongest areas of employment growth,” she said.

“With an ageing population and the growth in disability services, the demand for skilled staff will continue to rise yet we do not have a plan to develop this future workforce.

“This is the type of report that we want to go to the WA State Training Board with to make sure that this is a key focus area, like tourism is and the growth of tourism is in this state and making sure that we have appropriately trained skilled workforce in tourism, we need an appropriately trained, skilled workforce in the community service sector.

“Our sector will be growing, it won’t be falling in numbers.”

She said it had never been more important to invest in community services.

“In these difficult economic times, it has never been more important for government to invest in our community services,” Giolitto said.

“Not only to support those doing it tough, but as a boost to the economy itself.

“With the community services sector currently severely underfunded and overstretched, just imagine the benefit it could provide to WA both socially and economically if provided a sufficient level of investment.”