New consequences for failure to join the National Redress Scheme?

The National Redress Scheme for child sex abuse survivors was established in July 2018. Established as a voluntary scheme, it gives survivors a straightforward way of seeking redress from participating institutions. Institutions that choose to participate must opt in by 30 June 2020.

As the opt-in deadline nears, pressure is mounting on organisations to join the National Redress Scheme. In Victoria, Attorney-General Jill Hennessy said on the weekend that “We will be making it a condition of contracts with the Victorian Government that institutions that have got a liability when it comes to institutional sexual abuse join the redress scheme”. The Victorian Government has identified 49 eligible organisations that could join the scheme but have not yet done so. Funding in jeopardy includes future grants and new funding arrangements to deliver social or other services. Organisations that rely on government funding may now need to choose between opting into the “voluntary” scheme and financial ruin.

There is no doubt that the Scheme is an important pathway for survivors who wish to access redress as part of their healing process. Organisations have a legal and moral obligation to support survivors of historical child abuse and for many organisations, opting into the Scheme is an important part of this commitment. However, deciding whether to join the Scheme is complex.

It is tempting to assume that the only considerations for organisations regarding opting into the Scheme is whether they are truly committed to child safety and willing to accept responsibility for historical child sexual abuse. Whilst both of those factors are extremely important and have led many organisations to join the Scheme, the considerations are far more complex than that. The directors of charities and not-for-profits have a range of duties to the organisation that they are required by law to balance. This includes a duty to manage the financial affairs of the organisation responsibly and to act in the “best interests” of the organisation. These are not considerations to be taken lightly. It is very difficult to assess potential financial liability under the Scheme. Joining the Scheme may also compromise insurance cover held by an organisation in relation to claims of molestation. Schools have also been warned by the Federal Government that they are not to use recurrent funding for the purpose of funding Redress payments, making it difficult for some non-government schools to meet the financial requirements of the Scheme. The “best interests” of an organisation include protecting vulnerable individuals, but may also include providing services to current beneficiaries, using the resources of an organisation to pursue its purpose and preserving insurance cover.

The Scheme is not the only avenue for redress and organisations can and do take responsibility for historical child abuse through alternative pathways. Organisations that do not join the Scheme are still legally liable for historical child sexual abuse and can still be sued. Organisations are increasingly responsive to direct approaches from survivors, offering processes that are not adversarial, settlement payments comparable to or greater than  the Scheme and personal apologies from key personnel.

The Scheme is also not perfect, from the perspective of both survivors and organisations. Importantly for survivors, compensation is capped at $150,000 (as well as a small payment towards legal and potentially counselling costs). By contrast, some claims brought through the Courts have recently seen record compensation in the millions. Survivors that accept a payment through the Scheme also waive their right to bring a claim through the Courts. The Scheme does not cover physical and psychological abuse (except for physical abuse where there are also allegations of sexual abuse). For organisations, there is a lower standard of proof, tight time frames to respond to requests for information, little visibility of the process and reasoning behind determinations, and very limited opportunity to test the evidence of applicants. The process for joining the Scheme is time consuming and complex, particularly where there are multiple associated organisations proposing to join as a group. It can take months to work through the necessary due diligence. If an organisation joins the Scheme, they may still face civil claims and may even be managing the same claim under the Scheme and through the Courts at the same time. This administrative burden is significant, especially for small charities and not-for-profits.

This Scheme was introduced as a voluntary scheme. Arguably this meant that the detail of the Scheme was not subject to the same scrutiny as if it has been a mandatory Scheme. It is concerning to see punitive consequences for failing to opt-in being threatened at this late stage (only two months before the opt-in deadline), when many charities and not-for-profits have already undertaken their due diligence regarding their Scheme and board decisions have been made. The announcement is also likely to add additional stress for charities and not-for profits that are currently wrestling with the impact of COVID-19.

How we can help

At a time when many organisations are feeling the pinch, it’s more important than ever to get sage advice on joining the Scheme, and the potential consequences if you don’t. For more information, please do not hesitate to contact us.