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As the demand for foster care grows, the number of carers for children who have been removed from their families is in decline. The foster care system, almost unchanged in a century, is in desperate need of reform, as Kylie Grey investigates.

Almost 20,000 Australian children are living in foster care, removed from their biological parents for their own safety, and as the number of children in need of foster care rises, the number of carers is dwindling.

The long term prospects for many of the children are not good, with high rates of imprisonment and homelessness, and poor education outcomes.

A number of states are looking at how to attract more foster carers, including paying carers a tax free wage starting at around $55,000 per year and extending the age of support for children in foster care until a child turns 21.

In NSW, Cabinet has just approved reforms to the adoption process, aiming at encouraging open adoption as a more permanent and stable arrangement than foster care.

More than a quarter of all the children in NSW juvenile prisons have come from care.

This article represents part of a larger Background Briefing investigation. Listen to Kylie Grey's full report on Sunday at 8.05 am or use the podcast links above after broadcast.

Ted*, an inmate at the Reiby maximum security juvenile justice centre in Sydney, was seven when he was made a ward of the State and put in the care of DOCS—now the Department of Family and Community Services. Ted is now 15.

‘I left my mum when I was about five years old and I went to live with my nan. My nan never used to feed me when I got in trouble so I used to smash her window to get in to get some food, me and my brother, and she just put me in DOCS when I was about seven years old. Ever since I’ve been in DOCS,’ said Ted.

Today almost 20,000 children need foster parents, and they are increasingly hard to find.

Julian Pocock is the head of public policy for the Berry Street organisation in Victoria, which has been involved in child welfare since 1877.

‘With an aging population there are fewer people who are available to take on the role of being a foster carer,’ said Mr Pocock.

‘Secondly, through issues like family violence, mental health, substance misuse, particularly alcohol misuse, we have many more families struggling to meet the needs of their children and many more children needing to removed from their families and placed in care. And within the foster care system itself, we have a system that has remained remarkably unreformed for a century.’

Foster care agencies are now actively looking to recruit carers from groups in the community that were not encouraged in the past, such as same sex couples, young people and singles.

They’re desperately needed to take over from the current, aging generation of carers.

Some of the biggest reforms to child welfare in a generation are on the table as state and territory governments re-think how to provide long term care for these kids.

In NSW, the government wants to solve the problem of the foster care merry-go-round by relaxing the state’s adoption laws.

NSW Family and Community Services Minister, Pru Goward says children need a safe and permanent home.

‘They need their own history, they need permanency, they need someone to call Mum, they need to be able to act up and know that Mum is still there at the end of the day and isn’t ringing the foster care agency saying take this kid back I can’t manage him,’ said Ms Goward.

‘I have met kids at 19 or 20 who have had 20 placements, 20 families to live with. Why do we wonder when those children are more likely to be homeless, more likely to be illiterate, more likely to be in juvenile justice and more likely to have had a baby at 13 or 14 themselves when they’ve never attached, they’ve never known trust because they keep being moved.’

‘I think in the great departure from the orphanage model of 50 years ago we lost sight of the importance of providing a form of open adoption that would enable children to stay in touch with their birth family, their relatives but also gave them a permanent home.’

The NSW cabinet has just approved a reformation of the state’s adoption laws, which will be introduced into the parliament by the end of the year.

NSW will be the first state to actively encourage open adoption of children in the Out of Home Care System, but other states may follow.

Under open adoption the legal responsibility for the child is transferred from the state to the adoptive parents, and the child’s birth parents, siblings and extend family have contact, as opposed to the more common process of closed adoption.

Ms Goward is hoping changes to the adoption legislation will encourage more carers to come forward. Under the plan, birth parents whose children are removed will be given a strict timeframe to show they can care for them again.

For children under two, the birth parents will be given six months, and if the child is over two years old, the birth parents will be given 12 months to prove they can be good parents.

Ms Goward says the provisions are in the best interests of the children.

‘We talk a lot about the rights of parents: this is actually about the rights of children. We should be putting children at the centre of what we are doing here,’ she said.

‘Yes, six months for a woman who has a serious drug addiction and a serious history of domestic violence is not a lot of time, but if you are removing a child that early you can be sure there has been prior history and our commitment is to work as hard as we can with that mother to enable her to address the issues that stop that child from having a safe life.

‘For every day that you leave a child in a home where there is serious drug addiction, there’s needles on the floor, there is poo in the corner, there is nothing in the fridge, the child is filthy, the milk gets adulterated, there is a prospect that the child takes the heroin and the domestic violence is a horrendous factor for a child to see between its parents or between its mother and the new boyfriend, every day you leave a child like that you damage that child.’

However, the provisions have upset some in the welfare sector who say the timeframes are not long enough to allow birth parents to restore their ability to be good parents.

National Children’s Commissioner Megan Mitchell believes one way to get fewer children in Out of Home Care is to work on keeping families together.

‘When a child goes into care and sometimes it's not just the clean thing that they come into care and then they stay there for 18 years,’ she said.

‘For many children they go in and out back to their birth families and when they leave care, they go back to their families. So I don’t think that we can ignore the birth family in all of this. Whatever that issue was that led to that child being removed like substance abuse or domestic violence or mental health issues, we need to be addressing that as well because ultimately that child will most likely go back to that environment and if we haven’t addressed those issues in that family, the child and their siblings will still be exposed to all of those things.’

UPDATE: New Child Protection legislation has passed through the NSW parliament making adoption a first option for some children instead of temporary foster care. It also provides courts with the powers to force parents to undergo treatment programs for drug and alcohol addictions.

*Names have been changed