The number of children living in emergency accommodation in NSW has fallen for the first time in years as a staffing exodus impacts the state government's work to bring a "spiralling" protection system under control.
A revelation private service providers have been reporting inaccurate information about children in care to the government shows the system is far from fixed.
The NSW Department of Communities and Justice created a specialist team in November 2023 to help shift children from emergency accommodation - such as hotels and motels - to more permanent arrangements.
Emergency accommodation can cost up to $2 million a year per child, who are often cared for by a rotating roster of shift workers.
There were 506 children in emergency arrangements in November, but as of February the figure had dropped to 435.
Further changes can be expected in child protection, Premier Chris Minns said.
"Part of that will be a recognition that frontline public sector workers in that industry are leaving at a very, very substantial rate," Mr Minns said on Monday.
Public Service Association secretary Stewart Little said the sector faced a full-scale exodus, with burnt out workers leaving, while those remaining face a "ballooning backlog of vulnerable kids".
The government needs to hire additional staff and pay them more, he said.
"Or we are going to see horror stories unfolding across the state," Mr Little said on Monday.
The previous government's wages cap abolished by Mr Minns had suppressed pay for a decade and the union has a legal case ready to be heard by a rebooting NSW Industrial Relations Commission, he said.
"But we don't need to run a case, the government should simply give them a proper pay bump just like they gave paramedics and teachers," Mr Little said.
He warned of an untenable situation driving members towards industrial action.
While not committing to increased wages, Mr Minns said further negotiation will take place.
Family and Communities Minister Kate Washington told a budget estimates hearing on Monday children moved from emergency accommodation had either been returned to their family safely or placed in foster homes or other residential care.
The minister said the reduction had saved the state almost $50 million, but too many children were still in temporary arrangements.
The department is working to reduce reliance on alternative care arrangements, where for-profit labour hire firms provide staff to supervise children.
The use of these private providers, whose staff can often change on short notice, had dropped 42 per cent, from 139 children in alternative care in November to 80 in February.
The minister admitted she was concerned private out-of-home care providers were giving the government inaccurate information about vulnerable children in foster care.
The department had established a process to track the timeliness and accuracy of the information being provided to officials.
"It proved to be important because it did show there was a significant problem ... almost all of the information we were getting wasn't accurate," Ms Washington said.
Greens MP Sue Higginson said this showed the dire consequences of privatisation in the sector.
"It is simply not good enough that this responsibility has been outsourced to the private sector, which lacks crucial mechanisms for accountability and reform," she said.
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