Chapter 2 - Legal Aid Funding
2.1
This chapter discusses:
-
the
recent history and levels of Commonwealth and State and Territory
funding to Legal Aid;
-
the funding model used to determine the
distribution of Commonwealth funding;
-
the application of Commonwealth priorities and
guidelines in granting Commonwealth funds;
-
the breakdown of funding by type of matter:
criminal, family and civil;
-
specialist legal services;
-
the need to recognise the relationship between
"law and order" legislation with the resulting increase in demand for
legal aid; and
-
the Commonwealth/State dichotomy.
Recent history of funding to legal aid
2.2
Prior to 1997 the legal aid commissions (LACs) of each
state and territory were responsible for determining their own budget
priorities and expenditure. The Commonwealth participated in such decisions
through the Commonwealth Attorney-Generals representation on the board of LACs.
In 1996 the Commonwealth withdrew from this arrangement, and since July 1997
the state and territory legal aid commissions have been restricted to
allocating Commonwealth funding to matters arising under Commonwealth laws.
2.3
This funding arrangement is referred to as a
purchaser/provider arrangement, as under the legal aid agreements the
Commonwealth sets the priorities, guidelines and accountability requirements
regarding the use of Commonwealth funds.
2.4
In its Second
Report[1]
the Committee expressed its basic disagreement with the Commonwealth
Government's decision no longer to accept responsibility for the funding of any
matters arising under state and territory laws. The Committee reiterated its
concern in its Third Report.[2] The Committee
also expressed concern at the level of Commonwealth funding for legal aid.[3]
2.5
In 1996/97 the level of Commonwealth funding for legal
aid was $128.3 million. With the introduction of the new purchaser/provider agreement
Commonwealth funding was reduced to
$109.68 million in 1997/98, and to $102.84 million in 1998/99.[4]
2.6
On 15
December 1999, the Commonwealth Attorney-General announced that the
Commonwealth would provide $64 million in additional legal aid funding
nationally over four years, commencing 2000/2001. Commonwealth funding for
legal aid nationally in 2003/04 was $126.48 million.[5] The current
legal aid agreements expire on 30 June
2004.
2.7
In the 2004/05 budget the Government increased
Commonwealth funding of legal aid by $52.7 million over four years.[6] In a media
release regarding the Budget, the Attorney-General announced:
Additional funds will be available to State and Territory legal
aid commissions when they enter new legal aid agreements which are currently
being negotiated from 1 July 2004.
In return, the Government will be seeking timely reporting and
greater financial accountability from legal aid commissions.[7]
Levels of overall Commonwealth funding
2.8
The Law Council of Australia noted that although the
current four year funding agreements included an increase of funding of $64
million over the four year period, the level of Commonwealth funding in 2003/04
($126 million) was less than the level of funding in 1996/97 ($128 million), due
to the massive cuts to Commonwealth funding in 1997.[8]
2.9
It should also be noted that in real terms, the level
of funding in 2003/04 is substantially less than that provided in 1996/97.
After taking account of inflation, $128 million in 1996/97 is actually $153
million in real terms for 2003/04. This means that in real terms, the 2003/04
Commonwealth funding is $27 million less than it was in 1996/97.
2.10 Figure
1.1 below shows the history of Commonwealth funding for legal aid for the years
1995/96 2003/04.
Figure 1.1
Commonwealth Funding for Legal Aid
Source: Based on figures
provided in correspondence from Commonwealth Attorney-General's Legal
Assistance Branch to the Committee dated 9 February 2004.
2.11 National
Legal Aid (NLA), which comprises the Directors of each state and territory LAC
also noted that funding had only returned to the levels of 1996/97. NLA argued
further that due to increased costs of service delivery, there has actually
been a decrease in the quantity of services being delivered:
The additional $63m legal aid funding for 2000-2004, given CPI
factors, was no more than an attempt to return to levels prior to the 1996
funding reduction. It should be noted that the $63m has not been indexed and,
while the cost of providing legal services has and will continue to increase,
the increased funding is not keeping pace with increases in these costs.
Whilst the quality of legal service has not been affected by the
cuts, the quantity and extent of that service has. The so called
purchaser/provider approach has added an additional layer of administration
and financial accountability for all Commissions.[9]
Levels of state and
territory funding to legal aid
2.12 In
its response to the Committee's Third
Report, the Government criticised the Committee's report for not adequately
detailing the levels of funding contributed by states and territories to legal
aid.[10]
2.13 As
noted above in Figure 1.1, Commonwealth funding to legal aid dropped steadily
from 1996 to 2000. The four year funding package implemented in 2000 has meant
that in 2004, funding has returned to below what it was in 1996 (again, it
should be noted that in real terms it is $27 million less than it was in 1996/97).
In contrast State and Territory contributions to legal aid have, in the main,
steadily increased from 1996 to 2004.
Figure 1.2 State
Funding of Legal Aid
Source: Based on figures from National
Legal Aid website, accessed 10 March 2004: http://www.nla.aust.net.au
Figure 1.3 Territory
Funding of Legal Aid
Source: Figures for State and Territory Funding from
National Legal Aid website, accessed 10 March 2004: http://www.nla.aust.net.au, Commonwealth
funding figures from correspondence from Commonwealth Attorney-General's Legal
Assistance Branch to the Committee dated 9 February 2004
2.14 The
Government's introduction in 1996 of the Commonwealth/State funding dichotomy
was intended to move funding responsibilities to the jurisdiction within which
a matter arose. The Commonwealth would only fund matters arising under
Commonwealth law, whilst the States and Territories would fund matters arising
under their laws. Prior to 1996 the Commonwealth made a proportionately greater
contribution to legal aid than the States and Territories, since that time this
has been reversed, as the following figure shows.
Figure 1.4 State vs
Commonwealth funding of legal aid
Source: Based on figures from National
Legal Aid website, accessed 10 March 2004: http://www.nla.aust.net.au
Differences in Commonwealth funding to each State and
Territory
2.15 Funding
between the state and territory LACs is currently distributed under a 1999 funding
model that was based on research conducted by John Walker Consulting Services
and Rush Social Research. Submissions from each state and territory LAC
lamented that there is an insufficient level of Commonwealth funding.[11] Some
commissions also commented on the model used (discussed in more detail in the
next section) and the inequality of Commonwealth related legal aid services
that are available to citizens in each state and territory.
2.16 Legal
Aid Western Australia argued that
in per capita terms, 25% fewer people obtain legal representation to resolve a
family law matter in Western Australia
than do the national average.[12] It also noted
that Western Australia is the
lowest funded state or territory on a per capita basis, and as a result has the
highest refusal rate on applications received.[13] It also
pointed out that in real terms, per capita Commonwealth funding to Western
Australia has decreased by 28% over the last ten
years.[14]
2.17 The Victorian Department of Justice explained
that in 2003/04 NSW can expect to receive 50% more funding than Victoria,
despite only having a 36% greater population, and that Victoria can expect only
8% more funding than Queensland, despite the fact that Victoria has 31% more
people.[15]
2.18 Victoria
Legal Aid commented that in addition to different funding levels, the different
practices of each Commission (in relation to debt recovery and in the way they
apply the Commonwealth guidelines) can mean that citizens in each state and territory
face unequal chances of receiving Commonwealth related legal aid:
Victoria Legal Aid has
a very strong capacity to fund family law matters, whereas other states, such
as Western
Australia and Tasmania, on a regular basis have to say to applicants for aid for family law
matters: Im sorry. Your application meets the means test, the merits test and
the guidelines test, but we just do not have the money to fund you. So if you
are a Victorian with a family law matter you are in luck, but if you are in Western Australia you may well be in trouble.[16]
The funding model
2.19 There
were substantial criticisms of the model used to distribute Commonwealth funds.
The criticisms involved both in-principal objections to its assumptions and
methodology as well as specific errors in its application.[17]
2.20 The
Victorian Department of Justice and Victoria Legal Aid criticised three aspects
of the model, as well as general factors: unmet need, the 'suppressed demand'
factor and the 'average case cost' factor.
2.21 The
first criticism was that the model was based on the number of applications to LACs
and hence assessed met need and did not attempt to assess unmet need.[18]
2.22 The
second criticism related to the 'suppressed demand' factor used in the model.
The 'suppressed demand factor' seeks to account for reductions in demand for
legal aid, as a result of publicity regarding a lack of available funds:
The philosophy behind
that weighting was that in 1995, 1996 and 1997 the publicity in some
jurisdictions about the drastic cuts to legal aid was so severe that the demand
for legal aid in some jurisdictions was suppressed. It was an entirely
speculative exercise that that was the case. To apply a demand suppression
factor to only three of the eight jurisdictions was also entirely speculative
and to apply the weighting according to 10 per cent was entirely speculative.[19]
2.23
A
representative of the Attorney-General's Department explained the 'suppression
factor' in the following way:
I think it could be
described this way: due to publicity about levels of legal aid, people may not
have been making applications for legal aid in anticipation that they would not
be successful. A suppression factor was built into the model to increase
anticipated demand. It was adding in so you could anticipate that without that
suppression factor more applications would have been coming in some
jurisdictions.[20]
2.24 The
third criticism made by the Victorian Department of Justice related to the
average case cost factor included in the model:
The average case cost
element beggars belief, in terms of its logical foundations. It runs according
to this: if in a particular jurisdiction a legal aid commission has to pay a
higher average case cost to buy the service for the legal aid applicant, then
logically that commission can only afford to purchase fewer legal aid services.
If a commission can only purchase fewer legal aid services it must have a lower
level of demand, which therefore justifies lower levels of funding. That is the
way the average case cost factor was applied in the 1999 funding formula, and
it is a nonsense.[21]
2.25
In
evidence, the Attorney-General's Department explained the 'average case cost'
factor in the following terms:
The cost per case
factor was included because it was felt at the time that it reflected a
significant inverse statistical correlation of the cost per case with demand
for legal aid and as costs go up, depending on the cost per case, a legal aid
commission would be able to meet less demand and that would have an ongoing
impact on demand. The rationale for it is set out in the report of the model.[22]
2.26 Mr
Tony Parsons,
Managing Director of Victoria Legal Aid, argued that the model included
substantial errors. He pointed out that where the model sought to include
population figures of women, it erroneously included the population figures of
men.[23] He
also pointed out the population figure of people from non-English speaking
backgrounds was not based on Australian Bureau of Statistics figures, and hence
underestimated the population.[24] Victoria
Legal Aid expressed concerns over the model and noted the reduced funding that Victoria
had suffered as a result:
We have contacted the
creators of the modelRush-Walker developed the model for the Commonwealth in 1999and they have
confirmed those errors. So in the last four years, the Commonwealth has
distributed something like $450 million nationally for legal aid according to a
flawed funding distribution formula. Victoria takes a very strong stance on this because Victoria was the great loser from that distribution
model. In the last four yearsthe life of the agreement that was controlled by
that funding distribution modelWestern Australias funding increased by 30 per
cent, South Australias by nearly 20 per cent, Queenslands by 33 per cent, New
South Waless by 62 per cent and Victorias by zero per cent. So we have grave
concerns about that model and we urge the Senate committee to seriously review
its application.[25]
2.27
Victoria Legal Aid provided the Committee with a
version of the Rush/Walker model with the following amendments (see Table 1.1):
-
removal of the suppression and cost per case risk
factors for 2003/04 funding;
-
inclusion of 2001 Census Data for all states and
territories in the relevant demographic field - state and territory populations
by sex and age, non-English speaking background persons aged 10 and over and
Aboriginal and Torres Strait Islander persons aged 10 and over;
-
inclusion of new data for divorces involving
children aged under 18 years for the 2001 calendar year; and
-
inclusion of new data for the proportion of
households earning less than $300 per week.[26]
Table 1.1 Original Rush-Walker funding model compared to 'updated' model
for 2002-03 and 2003-04
|
Distribution of Commonwealth
Funding
|
Calculated Distribution of
Commonwealth Funding
|
|
for the two years to 30 June 2004 based on the original Rush-Walker funding model
|
for the two years to 30 June 2004 based on the updated Rush-Walker funding model
|
|
State
|
2002-03
|
2003-04
|
State
|
2002-03
|
2003-04
|
|
|
$m
|
%
|
$m
|
%
|
|
$m
|
%
|
$m
|
%*
|
|
NSW
|
38.956
|
32.31%
|
41.574
|
32.87%
|
NSW
|
32.699
|
27.12% (-5.19)
|
34.302
|
27.12% (-5.75)
|
|
Vic
|
27.75
|
23.02%
|
27.75
|
21.94%
|
Vic
|
29.648
|
24.59% (1.57)
|
31.102
|
24.59% (2.65)
|
|
Qld
|
23.709
|
19.66%
|
25.612
|
20.25%
|
Qld
|
24.801
|
20.57% (0.91)
|
26.017
|
20.57% (0.32)
|
|
SA
|
10.351
|
8.59%
|
10.802
|
8.54%
|
SA
|
12.286
|
10.19% (1.6)
|
12.889
|
10.19% (1.65)
|
|
WA
|
10.486
|
8.70%
|
11.232
|
8.88%
|
WA
|
12.684
|
10.52% (1.82)
|
13.306
|
10.52%(1.64)
|
|
Tas
|
3.88
|
3.22%
|
3.934
|
3.11%
|
Tas
|
3.569
|
2.96% (-0.26)
|
3.744
|
2.96% (-0.15)
|
|
ACT
|
3.104
|
2.57%
|
3.137
|
2.48%
|
ACT
|
3.448
|
2.86% (0.29)
|
3.617
|
2.86% (0.38)
|
|
NT
|
2.334
|
1.94%
|
2.441
|
1.93%
|
NT
|
1.435
|
1.19%(-0.75)
|
1.505
|
1.19% (-0.74)
|
|
Total
|
120.57
|
100.00%
|
126.482
|
100.00%
|
Total
|
120.57
|
100.00%
|
126.482
|
100.00%
|
|
|
|
|
|
|
* Same Percentage
Values used as for 2002-03 Data
|
Source: Victoria Legal Aid, Submission
97B, Attachment 1, p.2.
2.28 If
the model were to be subjected to the changes outlined above, the dramatic
changes in funding that would occur are a considerable reduction of funding to New
South Wales, a reduction in funding to Northern
Territory, and an increase in funding to Victoria.
2.29 However
it was not this model that Victoria Legal Aid put forward as its preferred
model.
The Commonwealth Grants Commission model
2.30 Mr
Parsons on behalf of Victoria Legal Aid suggested
that the current funding model should be replaced with a Commonwealth Grants
Commission model. He pointed out that the Commonwealth Grants Commission had
developed a simple model in conjunction with the Attorney-General's Department
and National Legal Aid.[27]
2.31 Victoria
Legal Aid gave the Committee a copy of this model which is shown below at Table
1.2. The basis for this model is different from the Rush-Walker Model, in that
it does not rely on LAC data, but bases its calculations on Grants Commission
assessment methods and relativity factors relating to (amongst other things)
the relative cost of delivering legal services in each state and territory.[28]
2.32 The
most obvious difference between the current funding model (or even the amended
one provided by Victorian Legal Aid) and this 'Grants Commission' model is the
funding to the Northern Territory and the ACT, which would receive dramatically
less funding under the Grants Commission model.
2.33 Victoria
Legal Aid explained that the Commonwealth has been provided with all the work
that Victoria Legal Aid and National Legal Aid have done in relation to
developing a new model. Mr Parsons
also told the Committee that the Commonwealth had committed to having
discussions with the LACs before the end of 2003, before the new funding
agreements are due to be signed off by the end of the financial year 2003-04.[29]
2.34 Victoria
Legal Aid's criticisms of the model were echoed by the Legal Aid Commission of
New South Wales, who also commented on the fact that the model does not account
for unmet legal need. It also confirmed it had consulted with the Commonwealth
about their concerns with the model:
[W]e are talking with
the Commonwealth, but not so much about the details of the model because, to be
perfectly honest, they are all flawed. The Commonwealth Grants Commission have
done some great work for us, but their work is not definitive either. The real
problem with all of that is: there is no way at the moment you can get an
accurate gauge of legal need; therefore you cannot factor that very important
point into these formulasbecause we simply do not know how to measure legal
need or unmet need at the moment. That is the difficulty.[30]
Table 1.2
A Commonwealth legal aid funding model based on
Commonwealth Grants Commission assessment methods, and application of estimated
state relativities to an illustrative 2002-03 funding pool
|
|
NSW
|
Vic
|
Qld
|
WA
|
SA
|
Tas
|
ACT
|
NT
|
Aust
|
|
General legal aid expenditure component (99.9%)
|
|
2000-01
input costs factor (a)
|
1.01355
|
0.99773
|
0.98285
|
1.00804
|
0.98190
|
0.98243
|
1.01549
|
0.99924
|
1.00000
|
|
Dispersion
factor (b)
|
0.99936
|
0.99525
|
1.00278
|
1.00694
|
0.99755
|
1.00770
|
0.98567
|
1.04242
|
1.00000
|
|
Cross
border factor (c)
|
0.99304
|
1.00000
|
1.00000
|
1.00000
|
1.00000
|
1.00000
|
1.13985
|
1.00000
|
1.00000
|
|
Low
income socio-demographic composition factor (d)
|
0.98405
|
0.97364
|
1.05089
|
0.94433
|
1.13019
|
1.18670
|
0.64655
|
0.85119
|
1.00000
|
|
Component
factor (e)
|
0.99171
|
0.96868
|
1.03775
|
0.96039
|
1.10917
|
1.17710
|
0.73908
|
0.88834
|
1.00000
|
|
Contribution
to relativity (f)
|
0.99072
|
0.96771
|
1.03671
|
0.95943
|
1.10806
|
1.17592
|
0.73834
|
0.88745
|
|
|
Isolation related
expenditure component (0.1%)
|
|
2000-01
isolation factor (g)
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
98.10726
|
1.00000
|
|
Component
factor (h)
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
98.10726
|
1.00000
|
|
Contribution
to relativity (f)
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.00000
|
0.09811
|
|
|
State relativity (i)
|
0.99072
|
0.96771
|
1.03671
|
0.95943
|
1.10806
|
1.17592
|
0.73834
|
0.98556
|
1.00000
|
|
Estimated State funding
($m) (j)
|
40.28
|
29.06
|
23.33
|
11.39
|
10.40
|
3.46
|
1.44
|
1.21
|
120.57
|
2.35 The
Attorney-General's Department confirmed that it is aware of some errors in the
model, and that it has been reviewing the model in consultation with the
Commonwealth Grants Commission and the Legal Aid Commissions:
In addition to the cost
per case factor and the suppression factor there were issues discussed in the
course of the review about whether the model should use actual rather than
projected population statistics. There were issues raised about whether it was
a demand driven model or a need driven model. There were also issues raised
about the use of Commonwealth Grants Commission factors and indices, which I
understand have since been changed. I think there were comments made about the
risk factors that were used in the model at the time. There were also what
might be described as technical criticisms of the methodology that was used, on
a more econometric basis.
we have been
discussing those concerns with the Commonwealth Grants Commission staff in the
course of the review and we have put a number of reworked models back to the
commission for comment along the way.[31]
2.36 Victoria
Legal Aid explained that a serious impediment in finding consensus in
consultations between the Commonwealth and the Legal Aid Commissions is that in
any change to the formula there will be winners and losers:
National Legal Aid will
never reach a unanimous view on a funding distribution model, because a funding
distribution model is always going to involve winners and losers. No-one wants
to go to their board and say, I have just agreed to a model that is going to
reduce the funding of our state legal aid commissionand here is my
resignation. We rely on the Commonwealth to show leadership in this area. We
want them to show leadership by adopting a model based on solid empirical data;
not the smoke and mirrors of the Rush-Walker model of 1999.[32]
2.37 The
Attorney-General's Department told the Committee that it was preparing a report
of the review of the model for the Attorney-General, and that a decision as to
whether the model will be changed is a decision that will be made by
Government.[33]
Committee view
2.38 The
Committee is concerned by evidence that the model the Commonwealth currently
uses to distribute funding between states and territories contains errors and
does not account for unmet legal need.
2.39 The
Attorney-General's Department has confirmed some of the errors pointed out by
the Victorian Department of Justice. A separate issue is the methods or factors
used in the model such as the 'suppressed demand factor' and the 'average case
cost factor'. Both of these factors appear to be arbitrary and without sufficient
foundation.
2.40 The
Committee notes that the Commonwealth Grants Commission has developed a basic
alternative funding model that utilises Commonwealth Grants assessment methods.
Whilst the Committee acknowledges that the Grants Commission model accounts for
the relative costs of delivering legal services in each State and Territory,
the Committee believes that a funding model should account for the levels of
demand and need for legal services in each state and territory. For example,
the Committee is not satisfied that the simple 'Grants Commission Model'
supplied by Victoria Legal Aid sufficiently takes into account the specific
challenges faced in the Northern Territory, particularly amongst Indigenous
Australians. The Committee believes that a new funding model based on the
Grants Commission model would be appropriate if it were adjusted to acknowledge
the special challenges faced by the Northern Territory in providing legal
services and access to justice in light of its high Indigenous population and remoteness.
These issues are discussed further in Chapter 5.
2.41 The
Committee is concerned that the current funding model (as well as the 'Grants
Commission model') does not account for unmet need for legal services. The
Committee notes that the Law and Justice Foundation of NSW is conducting an
assessment of legal need in that State, and commends this. At the time of
writing, Stage 2 of that assessment had just been released, which involved a
quantitative legal needs survey for disadvantaged people in NSW.[34] These issues
are discussed in more detail in Chapter 3.
2.42 Clearly
the unmet need for legal aid cannot be included in the funding model until an
assessment of unmet need has been made. Assessing the level of unmet need for
legal aid in Australia
is clearly a priority if the Commonwealth is to be able to develop a funding
model that optimises the level of access to justice for all Australians.
2.43 The
Committee notes that the Attorney-General's Department is reviewing the current
funding model in consultation with the LACs. The Committee also notes that the
Government's 2004-05 Budget proposes to increase Commonwealth funding for legal
aid by $52.7 million over four years. The Portfolio Budget Statements 2004-05
for the Attorney-General's portfolio notes that this increase will enable
'redistribution of legal aid funds across jurisdictions to meet demographic
changes'.[35]
2.44 The
Committee supports increasing Commonwealth funding for legal aid, however it is
not clear how 'demographic changes' will be determined, and as a result it is
unclear on what basis the increased funding will be redistributed. The
Committee is concerned that despite an increase in funding, there does not
appear to be provision for an assessment of unmet need in each state and
territory.
2.45 The
Committee believes that a new funding model needs to be developed to ensure
that increases in Commonwealth funding to legal aid are distributed in an
equitable and effective manner. As part of developing a new model, the
Committee recommends that the Government undertake or commission an assessment
of both demand for legal aid services and unmet need in relation to legal aid
(discussed further in Chapter 3).
Recommendation 1
2.46
The Committee recommends that the Government reform the
funding model for legal aid, taking into account concerns raised by legal aid
commissions in the recent review of the model. The Committee is not satisfied
with the justifications that have been offered regarding the 'suppressed demand
factor' and the 'average case cost' factor, and recommends that they be
removed.
Recommendation 2
2.47
The Committee recommends that the Commonwealth
Government develop a new funding model to ensure a more equitable distribution
of funding between the State and Territories. This model should be based on the
work of the Commonwealth Grants Commission model, but with increased funding
for the Northern Territory to account for the special challenges it faces in
light of its high Indigenous population and remoteness.
Application of Priorities and Guidelines
2.48 The
Commonwealth Priorities and Guidelines are set out in the legal aid funding
agreements between the Commonwealth and each state and territory. The
Commonwealths Priorities outline the broad areas which should be given
priority in using Commonwealth funds and are contained in Schedule 2 of the
funding agreements.
2.49 The
Guidelines are the tests that are to be applied by Commissions when assessing
legal aid applicants for Commonwealth related matters. They are contained in
Schedule 3 of the agreements and are made up of four parts. Part 1 contains the
means and merits tests that are to be applied to applicants, and parts 2-4
identify the types of family, criminal and civil matters for which Commonwealth
funds may be granted.
2.50 Various
comments were made in submissions and evidence about the different way that
these priorities and guidelines are implemented in states and territories.
The means test
2.51 The
'means test' set out in the guidelines assesses an applicant's assessable
income and assets. Applicants must qualify on both aspects, but if either is
exceeded, a grant may be made if the applicant makes a contribution.[36]
2.52 There
are two types of means test that can be used in assessing applicants for legal
aid. These are the National Legal Aid Means Test and the Simplified Legal Aid
Means Test. The two tests have the same assets test component, but assess
income in a different way. The Simplified Legal Aid Means Test varies from the
National Legal Aid Means Test in that it uses a formula that takes into account
the number of dependant persons in the applicant's household as well as the
employment status of the applicant and partner (if applicable).[37]
2.53 Currently,
all LACs except Queensland and Tasmania
use the National Means Test. The Attorney-General's Department noted that the
Commonwealth preferred the use of the Simplified Means Test because it
considers it easier to administer than the National Means Test, and therefore
more cost efficient.[38]
The Committee did not receive evidence from the LACs on the two tests.
2.54 In
relation to the means test, National Legal Aid argued that many people who
presently do not qualify for legal aid are unable to afford the services of
private lawyers to conduct their cases, or are unable do so without undue
hardship.[39]
2.55 National
Legal Aid argued that Commonwealth funding should be increased to allow the
means test to be adjusted to improve access to legal aid for those unable to
afford private representation.[40] It also noted that it had recently commissioned
research by Griffith University which indicated that there was a relationship
between the level at which the means test was set and self-representation in
the Family Court: It would not be unreasonable to speculate that the
situations identified in this research are likely to be paralleled in other
areas of the law.[41]
2.56 A
submission from Professor Rosemary
Hunter and Associate
Professor Jeff Giddings
of Griffith University,
who conducted the research commissioned by National Legal Aid, noted that their
research showed a significant income difference between those who met the means
test and those who were able to afford private representation.[42] Those
eligible for legal aid earned less than $25,000 p.a. after tax, yet people only
became able to afford private representation once they earned over $45,000 p.a.
after tax. Professor Hunter
and Associate Professor Giddings
noted that those between these income levels may have had financial commitments
that were not taken into account in the income test. They also pointed out that
low income people often met the income test but failed the assets test, despite
not having access to those assets being assessed.[43]
2.57 The
Hon. Justice Alastair Nicholson,
Chief Justice of the Family Court, also referred to this gap:
There is undoubtedly a
gap, if you like, between qualification for legal aid and the ability to fund
your own legal proceedings. Too many people fall into that gap A lot of these
people have no hope of being able to pay for legal expenses, yet the means test
is set at such a level that they are excluded.[44]
2.58 The
Welfare Rights Centre argued that this issue was particularly relevant to low
income defendants in welfare fraud prosecutions, who may have no income other
than welfare, but may own their family home, and hence fail the assets test:
There should be no
regard to the value of their principal home, if the person is on low income. A
classic example is someone [who] is on a disability support pension and all
they have is their principal home, who is charged with an offence in relation
to a $20,000 social security debt. There should be accessible legal aid for
that person, because they are not going to get legal representation anywhere
else. A disability support pension recipient may have an intellectual, psychiatric
disability or a brain injury that may be slightly relevant in that person
having incurred the debt in the first place and also highly relevant in them
not having chosen to access admin review of the debt before it got to that
point.[45]
2.59
The
Welfare Rights Centre explained that in NSW a person's equity in his or her own
home is disregarded up to $195,200. In non-criminal matters the Commission is
given the discretion to disregard a person's home equity, however for criminal
matters there is no such discretion.[46] The Welfare
Rights Centre argued that for criminal matters the means test for low income
earners or those on social security should be disregarded and for non-criminal
matters the threshold at which home value is considered should be raised
significantly.[47]
2.60 Professor
Hunter and Associate
Professor Giddings submitted that their
research suggests a correlation between the application of the means test
(particularly the assets test) and increasing levels of self-representation.[48] They
suggested three reforms to the means test which they argue would reduce the
levels of self representation in the Family Court:
These are:
1. take into account the question of
whether the litigant has realistic access to assessable assets
2. take into account previous attempts
to pay for private legal representation and existing debts to previous legal
representatives
3. extend eligibility to include a
higher proportion of clients earning less than $30,000 after tax.[49]
2.61 However,
if the means tests used by the LACs were modified in such a way without
increasing funding, it may simply lead to a more stringent application of the
merits test, as the Northern Territory Legal Aid Commission noted:
Without a substantial increase in funding, the NTLAC is unable
to increase the means test to enable more people to qualify for legal aid. If
the means test limits were to be increased on existing funding, the NTLAC would
have no choice but to read the merits test more narrowly to exclude enough
applicants for the NTLAC to remain within budget. The number of
self-represented litigants would therefore not be reduced but would simply be
caused by other reasons.[50]
The merits test
2.62 The
'merits test' essentially comprises three elements:
-
a legal and factual merits test;
-
a prudent self funding litigant test; and
-
an appropriateness of spending limited public
funds test.[51]
2.63 The
legal and factual merits test looks at whether the applicant has a reasonable
prospect of success. The prudent self funding litigant test is met if the
Commission considers that a prudent self funding litigant would risk their own
funds in the proceedings. The final element of the test is whether the
Commission considers the costs involved are warranted by the likely benefit to
the applicant or the community.[52]
2.64 The
Committee heard various arguments that the elements of the merits test are
substantially subjective. The Legal Aid Commission of NSW argued that the
'prudent self funding litigant' test should be abolished, on the grounds that
it is subjective, ambiguous, and difficult to apply in a transparent manner.[53]
2.65 The
difficulty in applying such a subjective test was echoed by the Combined
Community Legal Centres Group of NSW (CCLCG). In regards to the 'prudent self
funding litigant' test, Mr Simon
Moran explained:
Your guess is as good
as mine as to what that means. We have ideas and ways of addressing the
commission which we feel deal with that. Then there is this kind of catch-all
test at the end, which is whether the case is an appropriate spending of
limited public legal aid funds. Again, this leads to a sense of arbitrariness
with the provision of legal aid, which does not assist clients or,
particularly, solicitors when they are considering acting on a legal aid basis.
That has led to an increase of those issues regarding eligibility. We have
sensed their increase over the last five to seven years, and that has had an
impact on community legal centres as well as other legal service providers.[54]
2.66 There
were also concerns raised regarding the 'appropriateness of spending limited
public funds test'. The CCLCG gave an example to illustrate the subjective or
discretionary nature of the test:
The [case was] a
disability discrimination case that was brought by a man who had a disability
and who could only have accessed the town centre using his wheelchair. He could
not access the town centre as a result of various problems with footpaths, with
paving and with access on and off buses. So he considered bringing a complaint
of disability discrimination against the town council on the basis that he
could not access the premisesthe premises being the footpaths. We applied for
legal aid there. Essentially Legal Aid said, Its going to cost too much to
run; we cant fund this case, even though that person fitted into the means
test and there were reasonable prospects of success.[55]
2.67 There
was concern that the merits test is applied in different ways between states
and territories.[56]
Quoting research by Griffith University,[57] National
Legal Aid stated in its submission:
Amongst our concerns has been parity of eligibility across LACs.
In this regard the report which states There were evident differences between
Registries in both relative success rates in legal aid applications, and the
reasons why applications were unsuccessful. These differences appear to reflect
the respective family law funding positions of the Legal Aid Commissions. In Brisbane,
where demand for family law legal aid funding considerably exceeds the
available supply, applicants were more likely to be unsuccessful, and
applications were more likely to be rejected on the basis of merits. In Melbourne,
where the reverse situation applies, applicants were more likely to be wholly
successful, and the applications were more likely to be rejected on the basis
of means. In Canberra, and Perth,
which fall somewhere in between, applications are more likely to be
successful.[58]
2.68 Legal
Aid Queensland confirmed that the
different application of the guidelines was due to different levels of
available funds in each commission:
Legal Aid Queensland
applies the merit test with great rigour and reads it more expansively than do
other legal aid commissions. This is due to the funding shortfall requiring
funding constraints in the granting of legal aid for family law applications.[59]
Committee view
2.69 The
Committee's Third Report noted that
under the National Means Test the various jurisdictions were allowed to set
different monetary limits to items allowed under the test. The Committee noted
that this was to cater for both inter and intra-jurisdictional differences in
economic conditions. Whilst the Committee noted that it did not oppose such
variations in the means test levels if they were necessary in order to achieve
equitable outcomes in the light of differing economic conditions, the Committee
opposed such variations if based on inadequate provision of legal aid funds by
governments.[60]
2.70 The
Committee recommended that the Commonwealth Government ensure that the means
test income and asset levels were set at the same amounts for all parts of Australia,
unless regional variations could be shown to be justified by differing economic
conditions. The Committee also recommended that the Government conduct a review
of the appropriateness of the means test levels that currently apply.[61]
2.71 The
Government responded that it was unaware of any evidence that the legal aid
commissions tighten the means test to limit eligible applications for
assistance, and as a result it did not consider a review of the means tests was
necessary. It also noted that the Commonwealth preferred the use of the
Simplified Means Test.[62]
2.72 Regardless
of whether legal aid commissions are using the means or merits test in order to
limit applications by otherwise eligible applicants for budgetary reasons, the
Committee is genuinely concerned by evidence that there is a considerable gap
between those who qualify for assistance, and those who are able to afford
private representation.
2.73 The
Committee acknowledges that in many states, particularly New
South Wales, the means test appears to place a large
obstacle for many home owners. The Committee is concerned by evidence given by
the Welfare Rights Centre that many of its clients, particularly those with
intellectual disabilities, are stopped from accessing legal aid due to their
levels of home equity, despite having a very low income or being reliant on
social security.
2.74 The
Committee is also concerned by comments from Professors Hunter and Giddings, as
well as the Chief Justice of the Family Court, that there is a considerable gap
between those eligible to receive legal aid, and those who are actually able to
afford private representation.
2.75 However,
the Committee is also aware that if the means tests are made too liberal, then
Commissions may simply be forced to rely on arbitrary application of the merits
test in order to distribute limited resources.
2.76 The
Committee acknowledges the recommendations made by the Welfare Rights Centre
and Professors Hunter and Giddings. The
Committee believes that LACs should conduct an assessment of current
applications, and consider what the increase in successful applications would
be if those recommendations were implemented. This is necessary to be able to
assess the increase in demand these changes would place on current legal aid
resources.
Recommendation 3
2.77
The Committee recommends that the state and territory
legal aid commissions conduct an assessment of current applications, to
ascertain what increase in successful applications would occur if the following
changes were made to the merits test:
(a)
extend
eligibility to those earning less than $30,000 after tax; and
(b)
in criminal
matters, where a person passes the income test, disregard
home
equity.
Breakdown of funding by type of matter: criminal, family and civil
2.78 The
Committee's Third Report noted that
there had been concern that the Commonwealth Guidelines may cause criminal
matters to be funded at the expense of family matters, and that both criminal
and family matters may be funded at the expense of civil matters.[63] However the
Committee noted that there was no support for a strict hierarchy in the
Guidelines to ensure a particular distribution across the various types of
matters, as the result may be that the system is too rigid.[64]
2.79 The
Committee heard arguments that the funding priorities and guidelines favour criminal
matters over family law matters (see further in Chapter 4). The Committee also
heard that there are serious deficiencies in the level of legal aid available
for civil matters as a result of the Commonwealth funding guidelines.
2.80 The
Victorian Department of Justice explained that following the Commonwealth
funding cuts and the introduction of the Commonwealth Priorities and Guidelines
in 1997, funding for civil matters was almost abolished:
The impact for Victoria was severe. It included the almost complete
abolition of legal aid for civil matters so that now grants of legal aid are
very rarely made for matters such as discrimination, consumer protection,
tenancy law, social security law, contract law and personal injuries. Some of
those matters have been picked up by the private profession on a no win, no
fee basis, but substantial areas of law, particularly poverty related law,
have not been picked up.[65]
2.81 A
similar assessment was provided by the Legal Services Commission of South
Australia:
There are major gaps in
legal service available to the South Australian community. No legal
representation is funded for any civil disputationfor example, householders
versus builders, car dealers and insurance companies.[66]
2.82 Ms
Zoe Rathus on
behalf of the National Network of Women's Legal Services (NNWLS) also noted
that funding to civil matters had resulted in a drought of services:
I want to start by
reminding the committee of the number of areas of law that are simply not
covered anymore by legal aid and the concern amongst community legal centres
generally that there are areas of law where people can say, Theres no legal
aid for that. There seems to be a full stop, particularly in areas such as
immigration law and large areas of civil law for which legal aid is simply not
available anymore. We do not consider it acceptable for those kinds of areas to
exist.[67]
2.83 Whilst
the news from LACs was bleak in relation to the effect of the Commonwealth
Guidelines on assistance in civil matters, there was praise for the way that
NSW Legal Aid was providing assistance in civil matters:
The Legal Aid
Commission of New South Wales has a very innovative, very highly skilled
inhouse civil law program. Our experience as community legal centres is that
they are very highly skilled. They are very good at their job, and they have
specialist skills that other solicitors do not have. I believe that is the only
in-house civil unit in Australia, and it has been shown in New South Wales to be very valuable. I think other
commissions throughout Australia would be wise to adopt a similar model.[68]
2.84 Despite
the effectiveness of the civil unit administered by NSW Legal Aid, the
Committee heard that there is still substantial unserviced demand for civil
assistance in NSW, particularly in regional areas:
We see clients who have
problems with civil law, although New South Wales is one of the better states in its civil
law funding. We find that there is a huge demand for legal assistance in
employment law, particularly in the Blue Mountains, which is a tourist area and has a lot of parttime work and employment
of young people in under award situations. We are finding that, with that, a
deunionised work force and an increase in Australian workplace agreements, we
are getting a lot of demand in the complex area of employment law. Our region
needs either our centre or Legal Aid to fund an employment lawyer and possibly
a discrimination lawyer as well.[69]
2.85 The
Committee heard that Commonwealth funding for representation in Administrative
Appeals Tribunal (AAT) matters is limited to certain areas. The Committee also
heard that without free assistance in the non-cost jurisdictions of the AAT,
many people will not proceed, as the costs will often outweigh the award. The
Law Council of Australia explained that in the non-cost jurisdiction of the
AAT, up to a third of people are unrepresented:
that is a lot of
people. It is important to those people because they are often disputing
employment problems or welfare problems and so on. [70]
2.86
The Law
Council of Australia argued that the solution, apart from increasing funding,
is to relax the guidelines in relation to civil matters. [71]
2.87
Westside
Community Lawyers suggested that another way to remedy the lack of legal aid
for assistance and representation in civil matters was to provide duty
solicitors for such matters and noted that a pilot study into such a service was being conducted with final
year university students in the Adelaide civil registry.[72]
Committee view
2.88
The
Committee is concerned that the Commonwealth Priorities and Guidelines deny
adequate assistance in family and civil matters.
2.89
Whilst
the Committee acknowledges the importance of representation in criminal
matters, the Committee believes that adequate funding should be provided to
legal aid such that less restrictive guidelines may be introduced.
2.90
The
Committee is particularly concerned that adequate legal aid is not available to
those appearing before the Commonwealth AAT, as a substantial proportion of
such matters involve important issues such as employment and discrimination.
2.91
The
Committee believes that a duty solicitor service should be available for the
AAT.
Recommendation 4
2.92 The Committee recommends that the
Commonwealth introduce a duty solicitor service for the Commonwealth
Administrative Appeals Tribunal.
Specialist legal services
2.93 One
way to ensure that traditionally neglected types of matters receive a minimum
level of service is through the funding of specialist legal services. The
Committee received evidence in relation to the Commonwealth funding of two particular
services:
-
the Environmental Defenders Offices; and
-
an argument that the Commonwealth should create
and fund a forensic science institute to provide services to defendants.
Environmental Defenders Office
2.94 The
Environmental Defenders Office (EDO) was established to ensure there were legal
services representing public interest environmental law. The EDO
ensures that where a member of the public seeks to advocate an issue that is of
environmental public interest (and as a result may be unable or not prepared to
fund it themselves) the matter is accorded the necessary legal services.
2.95 In
terms of Commonwealth funding, the EDOs are restricted from using their funding
for litigation purposes. The Committee heard in its last inquiry that this
restriction imposed a significant constraint on the EDO
advocating to its full potential, and the Committee recommended that this
restriction by the Commonwealth be removed.[73] Mr
Mark Parnell
on behalf of the EDO explained to the Committee the
impact this restriction on Commonwealth funding had on them, and why it should
be removed:
To a certain extent,
this inquiry today has an element of deja vu about it. It has very similar
terms of reference to those of the inquiry back in 1997 and 1998, when the
Senate last looked at this, and I am saying very similar things to what a
colleague of mine said at that inquiry. We raised the issue of the litigation
restriction. We made the point that it had no basis in policy and that it was
politically motivated, and the Senate committee at that stage recommended that
that condition be removed.
The only policy grounds for not letting us litigate with legal aid money
seems to be the inherently political nature of environmental law. We are very
often challenging the decisions of the executive. We are challenging decisions
of statutory authorities and of ministers. We are challenging them on the
merits and on legality. The view seems to be that public funds should not be
used to challenge those sorts of decisions. The argument that I would put is
that that is like saying that we should not publicly fund criminal defence work
because it simply suggests that our law enforcement officers do not get it
right sometimes and that there should be no public funds used for defence. It
is exactly the same in relation to environmental law.[74]
2.96
Fitzroy
Legal Service also argued that the litigation restriction that is placed on the
Environmental Defenders Office should be removed.[75]
Commonwealth
funding for a forensic science institute
2.97
Liberty Victoria advocated the need for the Commonwealth to
establish an independent forensic science institute to assist in the defence of
those defendants who are facing charges supported by forensic evidence. Their
argument was that a lack of resources means that many defendants are unable to
afford the necessary defence to face charges that are supported by forensic
evidence.
Our principal concern
is that the field is heavily weighted against accused persons because they
simply do not have access to either the scientific or legal resources to enable
them to be, in a sense, playing on an even field. It is Libertys submission that, very rapidly, steps need
to be taken to correct this situation.
Liberty Victoria submits that it is necessary for a discrete institute to be established
for the use of accused persons and that, being a scientific institute, it
should have resources somewhat equivalent to those now available to the
prosecution authorities. At the present time, if accused persons wish to
challenge the scientific evidence relied upon by the prosecution, they have to
go looking in appeal to see if they can find qualified experts who are not
associated with the prosecution. That is very difficult. As DNA evidence in
particular becomes increasingly relied upon by the prosecution, that is going
to become an even more significant problem for accused persons.[76]
2.98
Liberty Victoria proposed that if such an institute were created, it would be able to
attend major crime scenes and offer an effective check to ensure that forensic
evidence is collected and processed in a proper manner.[77]
Committee view
2.99
The
Committee believes that although criminal matters appear to be funded at the
expense of family matters and that both criminal and family matters are funded
at the expense of civil matters, the Commonwealth Priorities and Guidelines
should not be amended to mandate a particular distribution of funding between
types of matter.
2.100
The
Committee reiterates the point it made in the Third Report that whilst attention must be paid to how funds are
distributed between matters, it would not be of benefit to have a rigid or
inflexible set of priorities for the purposes of funding allocation.
2.101
The
Committee was disappointed to hear that the EDO is still facing operational difficulties
because of contractual restrictions in its funding agreement with the
Commonwealth. The rationale for having a Commonwealth funded EDO is to ensure
that the area of public interest environmental law, which would otherwise have
little priority for receiving legal aid, is effectively advocated. For the EDO to be able to effectively advocate, it
needs to have the freedom to choose how it uses its funding in relation to
litigation.
2.102
The
Committee repeats its recommendation that the Commonwealth remove the
restriction on the EDO from using Commonwealth funding for
litigation purposes.
Recommendation 5
2.103 The Committee recommends that the
Commonwealth remove the restriction on the Environmental Defenders Office from
using Commonwealth funds for litigation purposes.
2.104 The Committee was
interested in the suggestion by Liberty Victoria that a national
institute for forensic science be established to ensure defendants have equal
access to such science as the prosecution does. Consequently the Committee considers that the
Government should support the establishment of such an institute.
2.105
The
Committee notes, however, that whilst it supports the idea in principle, it
does not believe the funding of such an institute should be done at the expense
of further funding to legal aid generally.
Recommendation 6
2.106 The Committee recommends that the Government
fund the establishment of a national forensics institute to provide forensic
opinions for defendants in serious criminal matters facing forensic evidence.
'Law and order' legislation and
increased demand for legal aid
2.107
The
Committee heard from LACs that when state governments engage in 'law and order'
campaigns, and introduce corresponding legislation, there is an increase in
demand for legal aid.
2.108
The
Legal Services Commission of South Australia explained in evidence that the
recent law and order campaign in that state, which manifested itself in the
form of stricter criminal trespass legislation, has lead to a steady increase
in demand for legal aid.
Our hypothesis is that
as the law and order campaign takes effect and new legislation is brought in
for serious criminal trespass, which has elevated the penalties imposed by the
courts on people trespassing on peoples property when they are present the
number of matters going to the district court has increased significantly, they
are being contested hard and, because the emphasis is on longer sentencing, the
sentencing submissions are being fought much harder. Our statistics have borne
that out. We are getting the Office of Crime Statistics and Research to
validate the research we have done. At the rate we are going, we have had to
ask the government for $1 million more in the next financial year just to
maintain the rate at which we are currently expending funds in the criminal
jurisdiction.[78]
2.109
This view
was supported by Victoria Legal Aid. Mr Tony Parsons noted that as a result of a road safety campaign there has been an
increase of applications for legal aid for road safety matters that involve the
risk of prison. These have included third offences, driving over the legal
limit (0.05) and dangerous driving. He noted that Victoria Legal Aid had been
fiscally compensated for this impact by the Victorian Government.[79]
2.110
Victoria
Legal Aid was asked in evidence for its views on a 'legal aid impact statement'
when legislation is introduced. Mr Parsons supported the idea:
It is a very sensible
proposal. Obviously legislation can have ripple effects and it is very
important that those ripple effects be taken into account so that the needs can
be best met.[80]
2.111
The Committee
asked Victoria Legal Aid whether the Commonwealth had undertaken such an
assessment or consultation with LACs. Mr Parsons noted that Commonwealth legislation has had an impact on legal aid
demand, and gave the specific examples of changes to the Family Law Act, social
security provisions and changes to the migration law.[81] He noted that
LACs are generally well consulted by the Commonwealth on reviews of legislation
and have the opportunity to respond to proposed legislative programs. Despite
such consultations, when a legislative program does proceed, there is no
corresponding compensation given by the Commonwealth, even where an impact on
legal aid demand is identified.[82]
Committee view
2.112
The
Committee believes that state and territory governments should pay specific
attention to the impact on legal aid demand when developing proposed
legislation. This consideration could either be in the form of including a
'legal aid impact statement' in the explanatory memorandum to legislation, or
through consultations with LACs.
2.113
However,
the Committee notes Victoria Legal Aid's comments that although the
Commonwealth consults over such proposed legislation, there is no corresponding
compensation when an increase in demand for legal aid services is identified.
2.114
The Committee
believes that state and territory and the Commonwealth Government must take
responsibility for increases in demand for legal aid that result from its new
legislation, and provide supplementary funding for LACs accordingly.
Recommendation 7
2.115 The Committee recommends that Commonwealth
and state/territory governments should provide legal aid impact statements when
introducing legislation that is likely to have an effect on legal aid
resources.
Recommendation 8
2.116 The Committee recommends that Commonwealth
and state and territory governments engage in consultations with legal aid
commissions when introducing legislation that may increase demand for legal
aid. If such an increase is identified, governments should provide
corresponding increases in funding to compensate legal aid commissions for this
increase in demand.
The Commonwealth/State dichotomy
2.117 There
was substantial 'in-principle' opposition to the Commonwealth/State funding
dichotomy. In addition to the in-principle opposition, there were criticisms
that the separation increased administration costs and resulted in an
inefficient use of what funding was available for Commonwealth matters.
In-principle opposition
2.118 The
Committee heard argument that the insistence of the Commonwealth that
Commonwealth funds only be used for matters arising under Commonwealth laws was
inefficient, and resulted in the Commonwealth failing to meet its obligations
to those for whom it has special responsibility.[83]
2.119 The
Law Institute of Victoria argued strongly against the dichotomy:
The rule that
Commonwealth funds may only be applied to Commonwealth matters is illogical and
arbitrary in its operation. It is this rule that has resulted in the legal aid
system failing so abjectly to meet the needs of the very people that it is supposed
to serve. We adopt the position that this rule should be abolished and that VLA
[Victoria Legal Aid] should be allowed to allocate legal aid funding according
to need. It should be left to VLA to determine where the interests of justice
require that legal aid be made available. Distinctions between Federal and
State laws are historical anomalies that are meaningless for present purposes.
The cynical adoption of this arbitrary distinction operates to diminish the
standing of the administration of justice in the eyes of those who come into
contact with it. To adopt these distinctions as a basis for withholding funding
encourages obfuscation of the issues by allowing the Federal and State
governments to shift responsibility for the gaps in the legal aid system.[84]
2.120
There
was a strong opposition to the dichotomy in submissions,[85] with no
submissions supporting it.
Administration costs
2.121 Because
the funding agreements first introduced in 1997 require that the LACs only use
Commonwealth funds on matters arising under Commonwealth laws, the LACs are
effectively required to maintain two sets of books.
2.122 Victorian
Legal Aid explained that under the funding agreement they are permitted to, and
do, spend five per cent of the Commonwealth allocation on administering the Commonwealth
Priorities and Guidelines.
The Commonwealth
permits VLA to take five per cent of the annual Commonwealth funding to
administer the Commonwealths program in this state. We have provided them with
financial data that indicates that that is about what it costs us to administer
the Commonwealth program. A substantial part of that five per cent is having to
effectively run two sets of books.[86]
2.123
The
substantial administration costs that are created by maintaining separate
accounts for funding was reinforced by the Legal Aid Commission of New South
Wales, which explained they spend 4.5 per cent of their Commonwealth funding on
administration.[87]
Inefficient use of Commonwealth funds
2.124 There
was criticism that the restrictions imposed by the guidelines stopped
commissions from using funds in matters that should rightly receive
Commonwealth funding. The Legal Aid Commission of NSW argued that the
restrictions imposed by the guidelines preclude those without dependant
children from accessing aid in a property dispute. Furthermore the requirement
that the applicant's equity in the matrimonial home be less than $100,000
precludes the vast majority of those in NSW from accessing legal aid:
The range of family law areas, which LACNSW is permitted to
undertake, is limited. Whilst it can
undertake work in child-related matters including residence and contact, child
support and certain maintenance areas, it is severely restricted in the types
of property dispute matters it can undertake.
For example, Guideline 8.2 states that legal assistance for
property matters may only be granted if the Commission has decided that it is
appropriate for assistance to be granted for other family law matters. The guidelines further state that legal
assistance should not be granted if the only other matter is spouse
maintenance, unless there is also a domestic violence issue involved.
This guideline effectively precludes people who have not had
children or whose children are adult, from obtaining a grant of aid. It also indirectly precludes aid for older
people. This guideline is discriminatory
and could be unlawfully so. If the
guideline is changed as it should be, further funding will be required to support
the likely increase in the number of cases which present.
Another problem is that legal aid may only be granted in certain
property disputes where the applicants equity in the matrimonial property is
valued at less than $100,000. Given real
estate values in NSW, the effect of this restriction is to deprive many people
who would otherwise be deserving of assistance.[88]
2.125 There
was also criticism that Commonwealth funds were being applied inconsistently
between each state and territory. The Victorian Department of Justice explained
that as different Commissions apply the guidelines differently, and some engage
in debt recovery processes that others do not, some LACs have scarce
Commonwealth funds available whilst some have a surplus they are unable to use:
The fact of the matter
is that, in the course of the last five years, we have built up a $20
million-odd reserve of Commonwealth funds. I want to spend that money. You
could never say that Legal Aid is meeting unmet legal need in the state of Victoria. The fact that the Commonwealth micromanage
how we can spend their money means that we struggle to do that; we struggle to
spend the money that we efficiently and rigorously collect from the community
who can afford to repay it.[89]
2.126 Victoria
Legal Aid explained that they regularly approach the Commonwealth for
permission to use this surplus for matters that are arguably of Commonwealth
responsibility, and are denied. When asked what the Commonwealth agreement said
on the issue, Mr Parsons
responded:
That money is collected
from clients who previously were given legal aid in Commonwealth law matters.
So the money we have collected is identified as a Commonwealth asset in our
bank account but the Commonwealth funding agreement says that we can only spend
Commonwealth revenue on a limited range of Commonwealth law legal aid matters;
that is, family law involving children and a very limited range of other
mattersfor example, veterans affairs.[90]
2.127
When
asked whether Victoria Legal Aid had sought permission to spend this surplus,
he responded that they had 'constantly and regularly' and were always refused.[91]
2.128 The
South Australian Legal Aid Commission proposed a compromise which would allow a
more flexible and efficient use of Commonwealth funds. It proposed that the
Commonwealth allow legal aid commissions to use 5-10 per cent of funding for
state matters.[92]
This would stand as a compromise, as the Commonwealth's desire to retain
Commonwealth funding for Commonwealth matters would be retained, but
Commissions would have the flexibility of using 5-10 per cent of funding for
matters that may exist in the grey area of the guidelines or may be of
particular need.
Committee view
2.129 The
Committee believes that the Commonwealth/State funding dichotomy is arbitrary
as many legal matters do not fall neatly in either category. Making such an
arbitrary distinction not only inhibits the effective servicing of legal needs,
it creates unnecessary administration costs for legal aid commissions. The
Committee is concerned by evidence from commissions that between 4 per cent and
5 per cent of Commonwealth funding is spent in administration costs. Clearly
the overall administration costs for Commissions would be reduced if they were
not required to maintain two separate accounts for funding.
2.130 The
Committee is also concerned by evidence from Victoria Legal Aid that it has a surplus
of Commonwealth funds, but is unable to use it on cases that may not fall
clearly within the Commonwealth Guidelines.
2.131 The
Committee believes that the Commonwealth/State funding dichotomy (ie the
'purchaser/provider' model) should be abolished, and funding should be returned
to the co-operative funding arrangements that were in place prior to the
creation of the dichotomy.
2.132 However,
if the current funding arrangements are retained, the Committee supports the
recommendation by the Legal Services Commission of South Australia that Legal
Aid Commissions be given a discretion of 10 per cent of Commonwealth funding,
to be used at the discretion of the LACs. This would allow them some
flexibility in accounting for demands for service that may not fall clearly
within the Commonwealth guidelines, but should rightly be serviced by
Commonwealth funds.
Recommendation 9
2.133
The Committee recommends that the current
purchaser/provider funding arrangement be abolished, and that Commonwealth
funding be provided in the same 'co-operative' manner as existed prior to 1997.
Recommendation 10
2.134
If the current purchaser/provider funding arrangement
is retained, the Committee recommends that the Commonwealth Government amend
the funding agreements to allow the legal aid commissions to use 10 per cent of
Commonwealth funding at their own discretion.