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The report, commissioned by the Ministry of Social Development (MSD) last year, was carried out by the Chief Social Worker with involvement from the Public Service Association.
CYF has dealt with a six-fold increase in its reported number of notifications over the past 15 years, the report said.
The agency needed to review the caseloads of a number of social workers, and to investigate ways to reduce social workers' administration and desk time, it said.
"Ultimately, to consistently deliver quality work, Child, Youth and Family will need to consider increasing the number of frontline care and protection social workers available for the most vulnerable children and young people, and reducing the work they are currently managing."
Social Welfare Minister Paula Bennett told reporters it was one of the "most in depth pieces of work" she had seen on the department, and she welcomed it.
"It means we can have a really honest view about where we're at, where we're going and what we need to do next."
The recommendations raised a number of issues with the department, Ms Bennett said.
"Yes they will need more social workers, we just need to make sure we're getting the right ones with the right caseloads, in the right place."
MSD chief executive Brendan Boyle said the review was an honest and thorough analysis of the day-to-day reality for frontline social workers.
"Put simply, we've found that some of our social workers have too much on their plates, and this has gotten in the way of the most important part of their work -- spending time with children and families."
Work was already under way to alleviate the pressure on those with caseloads that were deemed unmanageable.
PSA national secretary Brenda Pilott was pleased that the "unrealistic caseloads" faced by significant numbers of CYF social workers were recognised, and that the report proposed an early start in addressing the heaviest workloads.
"Political parties must prioritise extra funding in next year's Budget for CYF to hire much needed social workers, and for other agencies who'll pick up some of this work," she said.
Labour Party children's spokeswoman Jacinda Adern said the report showed that CYF work with vulnerable children had been put at risk through heavy caseloads.
" ... while CYFs' social workers are doing their best to respond to increasingly complex cases, the quality of their work is being compromised by the workloads they face.
"It confirms social workers are over-loaded and unable to focus their time and energy on the kids they are tasked with protecting," Ms Adern said.
"While Ms Bennett has repeatedly claimed it is impossible to work to a figure when determining whether a social worker is being stretched too far, this review proves otherwise."
More report findings:
* CYF data and information systems needed to be modernised and simplified, to better project workloads and future resource needs;
* it commended the agency for meeting time requirements for assessing between 95 and 99 per cent of its notifications;
* However, it said this came at a cost of other aspects of quality practice; and
* CYF operating model would need to be re-designed to support the action plan, to align with contemporary needs and risks, and to promote the delivery of quality social work practice.