Modelling forecasts looming financial crisis for residential care

Economic modelling completed by the Queensland Family and Child Commission indicates Queensland’s residential care system is on an unsustainable trajectory that will cost the state $7 billion annually by 2030 without urgent and immediate reform.

The modelling highlights the economic pressures and market failures driving the state’s residential care system, which is experiencing unprecedented demand without the requisite investment in quality.

The paper, Buyer beware: How economic forces are shaping Queensland’s residential care market, warns the current funding and service model is failing the children it is meant to protect.

Key findings include:

• Unprecedented growth in residential care: The number of children in residential care has surged 85 per cent over five years, largely due to a decline in foster carers, with Queensland now holding 40 per cent of Australia’s residential care placements despite accounting for only 21 per cent of children in care nationally.
• Exploding costs with little oversight: Residential care costs have ballooned from $200 million in 2015 to $1.12 billion in 2024, with the State Government acting as a “price taker”. Without urgent reform, out-of-home care costs are projected to exceed $7 billion annually by 2030, with an additional 5,000 children requiring placements, most of whom will be in residential care.
• Poor performance metrics are affecting quality: Contracts prioritise outputs over outcomes, meaning providers work to meet targets (for example, number of children housed or hours of care delivered) rather than delivering meaningful value (for example, improving children’s wellbeing or receiving positive feedback from children about their care).
• Poor stewardship and accountability: The State Government has outsourced all out-of-home care services to non-government providers with little market oversight, and more than 80 per cent of unlicensed providers are for-profit, raising concerns about how providers are prioritising quality and children’s safety.
• Government contracting arrangements have continued unchanged: The Queensland Family and Child Commission recommended in March 2024 the Queensland Government cease using generic residential care contracts and service standards and instead use new contracts with bespoke care standards for the children in each house. Since then, 30 new generic contracts have been executed and 173 placements procured.
• Government inaction has compounded pressures on the system: Modelling has not adequately forecasted future demand to inform appropriate responses, causing the system to default to crisis response and place children wherever beds are available, regardless of suitability or cost. This is compounded by a sector that has commodified care.
• Worsening social drivers: Rising rates of family violence, homelessness, poverty, and poor mental health are pushing more children into the system, while the proportion of early intervention funding has declined.
• Investment in early intervention is comparatively low: Queensland’s expenditure on general family support per child has decreased significantly while the Australian average has increased significantly. This indicates Queensland is reducing the early, broader supports, meaning once families do engage with the child protection system it is often too late to redirect from an out-of-home-care placement.
• Slow investigations are forcing a reliance on crisis intervention: Queensland has the highest proportion of child protection investigations taking more than 29 days to begin. These delays reduce opportunities for early intervention and push the system toward reactive crisis management instead of proactive support.
• Under-investment in the workforce has affected quality: The residential care workforce is highly casualised and capability is insufficient to manage escalating complexity of families’ circumstances. Job advertisements reveal the sector has an over-reliance on individuals with entry level skills.

To address the failures, the Queensland Family and Child Commission calls for urgent reform including:

• outcome-based commissioning that funds results, not service volume
• greater investment in early intervention to better support families so children can live safely at home
• new models of family-based and therapeutic care to reduce over-reliance on residential care
• stronger government stewardship and transparency to restore system accountability
• workforce stability and improved professional capability to improve the quality of care provided to children.

The paper acknowledges the Queensland Government’s Child Safety Commission of Inquiry is investigating the points of failure within the system and is a critical step towards long-term structural reform.

The modelling suggests that during the course of the inquiry, the residential care system will grow by close to 1000 places or 33 per cent. With the residential care system causing harm to children today, delaying action until the inquiry concludes risks further compounding this trauma.

Quotes attributed to Queensland Family and Child Commission Principal Commissioner Luke Twyford

“Despite record spending on Queensland’s residential care system at more than $1.1 billion annually, outcomes for children remain poor and demand continues to rise.

“Our child protection system is at a tipping point, and we can’t continue to pour money into a system that is compounding trauma for children and failing to gain community trust. It’s clear we can use the money better.

“Somewhere along the way, we have forgotten about the purpose of the child protection system, which is to provide safety, stability and care for a child.

“Queensland needs to reorient our system around the needs of children, not the convenience of providers or the limits of contracts.

“This is not simply a funding issue; it is a design failure. Without a deliberate shift toward stewardship, strategic contracting, and outcomes-based investment, the system will continue to grow in cost while failing the children it’s meant to protect.
“Without immediate action, we face a multi-generational crisis of cost, harm and lost potential.

“The responsibility to raise the standard of care for children doesn’t rest solely with government; providers and organisations across the residential care sector must change their approach to delivering this crucial role.

“This is a time for Queensland to transform the way we care for our children, and I urge the state and the sector to rise to the moment.”

ENDS

For media information contact:
Kirstine O’Donnell | Queensland Family and Child Commission
Phone: 0404 971 164
Email: media@qfcc.qld.gov.au