About my friends boyfriend; he's not allowed to work with children but he's allowed to be around them. He has contact with his other children (who claimed they were abused by him - and he has a fair few kids, too! He admitted to abusing a child who wasn't his genetically) and that's legal also. The only time the oh-so-brilliant Department of Child Protection would intervene is if he actually hurt her baby. It has occurred to me to alert the authorities because there are other dodgy goings-on related to them living together but that would not help her child in the slightest so I don't really see the point. He cannot have custody of his children but has supervised visitation, but children he has not abused (yet) are not considered to be in danger.
The Department of Child Protection can not intervene if they don't know that he is living there. This would be the point of you (who have the knowledge) of notifying them. If getting the authorities involved prevents or stops a child from continuing abuse then you would be helping the child in a big way.

If he has access to this child, and the mother is not able or willing to protect the child then notification may give the child a chance. The mother may be able to given resources, or information so she feels able to, and understand her role to protect the child. And if the mother is not able to fulfill her role then someone needs to protect the child.

I don't think there is a need to comment on other parents parenting styles that may differ with no immediate danger to the child, but in this case the child needs to be protected.