The Legal Services Commission of South Australia (LSC) is heading for financial disaster, according to its director, Hamish Gilmore.
Speaking to Lawyers Weekly on Wednesday, Gilmore said the financial situation of the LSC was becoming increasingly dire, with an operating deficit of $1.5 million predicted for next year.
"The bottom line is that we have enough money to run for this financial year, but our expenditure is now exceeding our receipts. We will begin the next financial year in a position where we will have effectively depleted our reserves. Unless we can get supplementation we are going to have a shortfall," he said.
And this, according to Gilmore, would be catastrophic for the growing number of people who rely on the LSC's services.
"More and more people are seeking legal aid. We are granting more and more applications for criminal matters ... and they are in higher jurisdictions. So the cost of providing legal aid is going up while our receipts are going down. It is a formula for disaster," he said.
Gilmore has blamed the diminishing funds on the effects of the global financial crisis, as well as falling interest rates.
"The major reason for [the shortfall] is because the interest we get from solicitors' trust accounts has plummeted, for two reasons. One was the GFC, as there wasn't as much money going through their trust accounts. The other was that interest rates fell, so when interest rates halve we get half the amount of receipts," he said.
A spokesperson from the South Australian Attorney-General's department told Lawyers Weekly on Thursday that it is impossible for the LSC to go broke.
"Because it is a statutory body, it can't run out of money. It is like saying that the health department will run out of money. At the beginning of the financial year the LSC had, on top of the money allocated to them, $7 million in reserve funds," he said.
While Gilmore agrees that there is about $7 million in the LSC's reserves, he says that $3.4 million of this has already been promised to lawyers for upcoming legal work and $1.5 million is allocated for staff long service leave.
"It is not as if there is just money sloshing around. It is money that has actually been committed ... and it is not available for operating expenditure," he said.
The Attorney-General's department said that any confusion as to the amount of funds held by the LSC could be explained by differences in administration.
"[The LSC's] accounting methods are done slightly differenty to those of our department, so that is where lots of the confusion lies," he said.
Gilmore said the LSC has had to dip into funds previously earmarked for the updating of vital computer and accommodation services, and is looking to the State Government to provide extra funding in next year's budget.
"If we don't get extra funding in the budget it means that ... we will continue to limp along with substandard computing systems and substandard accommodation," he said.
And, according to Gilmore, it is not just South Australia's LSC that is feeling the pinch.
"This is happening around the nation and all of the [legal aid] commissions are in the same boat," he said. "We are hurting."
- Claire Chaffey