RESIDENTS of the Sandhurst Centre will continue to receive care provided by the Department of Health and Human Services.
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The state government put out a tender to non-government providers to manage new accommodation homes in September last year after it announced the centre would close.
The 29 residents of centre and their families were consulted over the tender and chose to remain with DHHS over non-government provider the Melba and Karden Disability Foundation.
Health and Community Services Union (HACSU) secretary Paul Healey said it was a win for residents, their families and staff at the centre.
"This campaign to halt the contracting out of Sandhurst has been one of the most important and difficult campaigns by HACSU members in our 100-year history," he said.
"It will mean residents will continue to be cared for by people they know and trust, with a high level of care.
"It also means staff will retain their job security and continue to receive decent standards of pay and proper working conditions."
Mr Healey said the process undertaken by the Labor Government had ensured all parties had a real choice on whether they wanted to continue with DHHS or be contracted out to the private sector.
The Sandhurst Centre was one of two remaining government-run disability institutions in Victoria.
In May, the Andrews Labor government announced $7.9 million to build five new community residential units to replace the existing style of care.
Residents will move into the new units in 2016.
Housing, disability and ageing acting minister Jenny Mikakos said the Andrews Labor government was committed to ensuring Sandhurst residents and their families had a say over their future.
"We conducted a fair and independent process in which all residents were consulted about their choice of service provider," she said.
"As a result of that process, all residents decided to stay with residential care provided by the department."
The five home will be built on five blocks of land purchased throughout the City of Greater Bendigo.
In October last year, the government had bought three blocks of land for homes, including one in North Bendigo, California Gully and another in Strathdale, and intended to acquire the second two sites in coming months.