NDIA Accountability Project

Scheme governance and interface with other service systems

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Current Scheme Implementation and Forecasting

for the NDIS

Submission to the Joint Standing Committee on the National Disability Insurance Scheme

October 2021

Introduction

The Alliance welcomes the opportunity to make a submission to this very important inquiry.

The Inquiry’s Terms of Reference are well targeted to the key issues related to the performance and conduct of the NDIS to date.

Due to time constraints, the competing demands of other consultations in this space and escalation of our work with younger people trying to move to the community from aged care, this brief submission will highlight a number of headline issues we will explore in greater detail in a second submission to the inquiry in February 2022. As a result, we are confining this submission to the core issues of scheme governance, boundaries and interface with other service systems, and the National Injury Insurance Scheme.

It is important to note that the NDIS legislation was designed to support the scheme’s launch during its initial three year trial phase. While some aspects of the design of the NDIS were developed for this launch phase, it was not expected that all features of the scheme at the beginning would continue into full scheme rollout. Instead, the stated aim was to learn from these initial activities and amend the scheme’s design and operations based on evaluation and experience.

Unfortunately, the commitment to evaluation evaporated very early in the life of the scheme, the much heralded learning culture was not sustained and the original governance and administrative arrangements have endured. These have been shown to be unfit to properly underpin this landmark social insurance scheme as it continues to mature.

Governance arrangements

The current governance arrangements were originally developed in the context of the launch and learn strategy, and worked well when the NDIS only had 30,000 participants. Now at full scheme with 480,000 participants, the NDIS is a major government agency with significant obligations. The governance system needs to reflect the importance of the NDIS in Australian life; be structured so it can engage with people with disability and their allies and other government programs; effectively manage risks; and take opportunities to ensure the scheme achieves its legislated objectives.

The NDIS Board has become inward looking and lacks the strategic focus needed to embrace the significant opportunity the NDIS has to lead reform of Australia’s service system to the benefit of all citizens. This activity is urgently needed to integrate service systems and establish the NDIS’ position as a leader in public governance. Instead, the Board has not only demonstrated its lack of mandate here, but also its inability to influence the collaborative engagement of the NDIS across government programs. As a result, the Board has failed to tackle the key risks the scheme faces at its boundaries.

The NDIS has been subject to intensive government intervention since moving to full scheme. In providing direction to a new government agency, one of the Board’s key roles should have been to ensure the NDIA modelled contemporary public administration

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principles of collaboration, policy driven innovation and a commitment to co-design with all stakeholders. Rather than seizing the opportunity to lead and innovate, the NDS has become just another siloed government program. It has foresworn reform and made delivering on its original promise of solving wicked problems for people with disability, all but irrelevant.

The diminution of the influence and input of the States and Territories has also made achieving these critically important solutions more difficult. As co-owners and co-funders of the scheme, the States and Territories have a vital role to play in the schemes governance. The connections between the NDIS and State and Territory service programs in health, education or justice could, for example, be better realised if the governance structure of the NDIs enabled all governments to share both the risks and the rewards of the scheme.

Instead, the outdated trench warfare approach to disability policy between the Commonwealth and the jurisdictions that was a hallmark of the old disability system the NDIs was intended to resolve has continued, to the detriment of people with disability.

The disability reform program that started with the launch and trial of the NDIs has now stalled and must be reinvigorated for its potential to be realises. New governance and machinery of government arrangements are required. The Alliance has raised this issue previously, suggesting that the NDIs be linked to a central department of government such as Prime Minister and Cabinet or Treasury rather than be tied to the Department of Social Services (DSS).

It is no longer appropriate for the DSS to act as the de facto policy arm of the NDIS. A $25 billion national agency should not need to be chaperoned through its development of policies, or its negotiation of formal agreements with state or commonwealth services. Leaving this to DSS is not only inefficient but has encouraged content free intervention in the schemes operations.

As a lifetime support scheme, it is critical that governments devise long term strategies for the NDSI rather than continually look to the short term as has been the case so far. A long term plan that sees the NDI connect formally with other service systems and manage risks through collaboration on policy development and service delivery with these systems, must be a key feature of such a long term view.

One long term option for the delivery of the scheme that should be canvassed once the states and territories are co-governors of the scheme, and the National Injury Insurance Scheme (NIIS) is fully implemented, is to consider State/Territory Lifetime Support Schemes administering the NDIS in ways that bring the scheme closer to communities and other service systems.

Reforming the schemes governance structure as indicated will change the place and role of the existing board and the Independent Advisory Council (IAC). The Independent Advisory Council was a relevant and necessary inclusion in the original legislation to advise the board

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during trial. But as the scheme has grown, a single body of people with lived disability experience will not provide the detailed advice and engagement the NDIS now needs.

As an important government agency, the scheme requires a comprehensive structure to co-design processes and policy with Australians with disability that includes Aboriginal and Torres Strait Islander people and their organisations, representative national and state disability organisations, diagnostic groups and children’s organisations. This engagement and co design structure should also link national, state/territory and local government entities, as well as other disability advisory groups such as the one proposed for the National Disability Strategy.

NDIS boundaries and intersection with other service programs An area of acute policy and practice inertia prior to the launch of the NDIS and since, the Commonwealth has not progressed work in this important area despite recommendations from numerous inquiries, reports and AAT judgements.1

To date, neither the Commonwealth nor the NDIA have shown any inclination to action modern public administration theory and collaborate constructively with the state and territory jurisdictions. As a result, there has been a clear failure to manage the scheme’s sustainability by addressing external risks that come from cost shifts, gaps in services and the policy decisions of other service systems.

Rather than its current defensive and inward looking approach, it is beyond time for the NDIA to become the constructive leader in the public sector it should be and work positively with other service systems. In this regard, the COAG’s Applied Principles and Tables of Support to determine the responsibilities of the NDIS and other services (APTOS)2 must be revised as a matter of urgency.

Drafted before full scheme, the Applied Principles were instigated from a concern that other service systems might take a predatory approach to the arrival of the $22 billion scheme and try to cost shift to the wealthy ‘new kid on the block’. As a result, the Commonwealth drew preemptive and defensive boundaries around the scheme and community service supports that have effectively blocked the development of more collaborative and contemporary intergovernmental protocols with the NDIS.

Derived as they are from the traditional separation of government programs, the APTOS not only lack any incentive for programs to collaborate, their drafting has actually supported the NDIS to take a like minded predatory approach to other programs. Instead of articulating

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the multidisciplinary ‘joined up’ responses that are so greatly needed, the scheme’s interactions with other systems are thus primarily concerned with the binary debate of who pays.

This is particularly the case when the scheme interacts with the health and aged care systems. As example, the NDIS continues to ignore the ‘enmeshed’ nature of health and disability to argue that some supports are the funding responsibility of health services alone. Yet most disabilities are the result of an adverse health event and a disability often results in poor health.

The scheme’s interactions with aged care take a similarly divisive approach to the provision of supports for NDIS participants living in residential aged care (RAC). Instead of facilitating a ‘partnership in care’ approach with the aged care service, the scheme tries to equate aged care’s aggregated funding model with the NDIS’ individualised funding approach and demands evidence of what the RAC service “does” for the NDIS’ back of house reimbursement of the Aged Care Funding Instrument (ACFI) to the federal Department of Health.

The Disability Reform Council’s (DRC) 2019 decision that the NDIS would pay for a “range of disability-related health supports” 3, naively hailed by the Tune review as an example of progress at the scheme’s interface,4 has simply codified the decisions of a number of Administrative Appeals Tribunal (AAT) rulings that have found against the NDIS in these areas. So too, the DRC’s agreement in the same Communiqué that its Hospital Discharge Delay Action Plan “…will address NDIS related issues to promote timely discharge of NDIS participants from public hospitals…”,5 fails to consider just where NDIS participants facing timely discharge from acute care can be discharged.

Indeed, without attention to those NDIS administrative processes that determine eligibility, deriver one dimensional planning and inherent delays; without consideration of other elements such as interim accommodation, rapid response home modifications or designing integrated service responses, simply speeding up the discharge ‘timetable’ from hospital will also speed up placement in residential aged care for too many NDIS participants.

The inherent limitations of the COAG’s Applied Principles were well described by the Deputy President of the AAT in the Burchell case:

 The COAG Principles are a high level, general, statement about what the health
  authorities are responsible for, and make no allowance for gaps in the service provided.
  There appears no intention in the COAG document to state how the Act and rules

Measuring Scheme Performance and Future Modelling

In its 2011 Disability Care and Support inquiry report, the Productivity Commission concluded

 As a major reform, the proposed NDIS will generate profound economic benefits. These
  benefits arise from many sources:

    - wellbeing gains to people with disabilities and informal carers, noting the very
     poor outcomes under the current system described earlier. While it is hard to
      assign market values for these intangible benefits, they nevertheless are still
     economic benefits, and likely to eclipse the benefits of many things that are
     counted as valuable in official statistics
    - efficiency gains in the disability sector. Much of the existing system has been
      centred on the contractual relationships between service providers and
     governments, not supports chosen by people to suit their lives. As one participant
      noted, a support provided at the wrong time is like 'sending a bald man to a
       barber'. A new coherent system would achieve much better value for money. Every
     one per cent increase in productivity would lower scheme costs by $130 million

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  • savings to other government services, such as reduced ‘bedblock’ in hospitals and savings in the justice system through better community support of people with significant and enduring psychiatric disability

  • increased economic participation for people with disabilities (against a background of Australia’s low performance in this area compared with most other developed economies) and their informal carers

  • fiscal gains, for example those associated with reduced use of income support by people who enter employment. Moreover, in weighing up the above benefits against the costs, it should be emphasised that the net economic cost of the NDIS is not the budgetary cost of around $6.5 billion (which is a transfer), but rather, the distortionary impacts of raising the revenue. That represents a cost of around $1.6 billion.

    Given this, the NDIS would only have to produce a gain of $3800 per participant to meet

    a cost benefit test. Given the scope of the benefits, that test would be passed easily.7

To date, the NDIS and the government have only used scheme costs as a measure of sustainability and performance. Given the Productivity Commission’s argument that the economic benefit to Australia was to be realised in places other than the NDIS’s own operations, surely the overall assessment of the scheme’s performance must be measured in a broader context that takes account of the offsets the scheme’s model was predicated on? These include the ‘bed blocking’ in health systems the Productivity Commission identified as well as examples in justice, education, employment and other areas operated by government programs.

We strongly recommend the Committee investigate options for this broader performance monitoring to be routinely undertaken by the Productivity Commission to complement the work done by the Scheme Actuary on scheme costs. This broader performance monitoring is an essential part of ensuring the NDIS’ success as a social insurance scheme and should continue in concert with outcome data collection. Unless this occurs, the NDIA’s internal work alone will not be sufficient to assess the real cost/benefits of the NDIS.

Combined with NDIS costs and projections, this work can deliver a true picture of the scheme’s benefits and where these are realised, this evidence will more accurately inform the funding arrangements of all governments in the future. Equally, if the operations of other service systems are delivering costs to the NDIS, identifying these and the reasons they are exerting cost pressures, can inform corrective action.

Without this full suite of data, it is impossible to truly evaluate the performance of the scheme and understand the nature of the risks and cost pressures it faces as well as the benefits it is realising.

Finally, current funding agreements see the Commonwealth responsible for any cost over runs beyond initial projections. Yet the NDIS is an uncapped scheme. The notion of

7 Productivity Commission, Disability Care and Support Inquiry Report, Overview and Recommendations, Canberra 2011: 54-55.

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overspends and cost over runs has influenced the Commonwealth’s defensive approach to managing the NDS. As part of the restructuring of Commonwealth/State/Territory involvement in the NDLS and its financial modelling, the notion of “scheme overspend” should be discarded.

National Injury Insurance Scheme (NIIS)

A key component of the disability reform program outlined by the Productivity Commission was its definition of the National Injury Insurance Scheme as a companion scheme to the NDI$. The Alliance has continued to raise the failure to complete the full implementation of the NIIS with this Committee in other inquiries, most recently its Inquiry into Independent Assessments.

In the Alliance’s submission to that inquiry, we pointed to the lost opportunity of the full NIIS and its adverse impact on the NDIS’ sustainability. Since then, the NDIS’ estimation of the additional cost it bears in the absence of the general and medical injury streams of the NIIS, has increased significantly.

In the 2021 NDIS Sustainability Report ,the Scheme Actuary estimates that the failure to implement these remaining two streams will cost the NDIS $600m per year by 2029/30. With better data and the benefit of scheme experiences to inform these estimates, the full implementation of the NIIS is an urgent policy priority.

However, this is not just about NDIS costs and sustainability. The fact that a person sustaining a catastrophic injury cannot get the same rehabilitation response and/or the integrated health and disability supports required if they are forced to rely on the NDS rather than a complete NIIS, is an unparalleled tragedy. As well as the real costs and lost potential injured individuals sustain without access to a completed NIIS, the injury scheme would also support people injured after the age of 65. These individuals are currently ineligible for the NDLS and are forced to rely on an aged care system never meant and certainly not resourced to respond to their needs.

We recommend the Committee take a close interest in the issues concerning the NIIS and examine the reasons for the policy inertia delivering the injury Scheme’s full implementation.

We look forward to providing a more detailed response to this Inquiry’s Terms of Reference in February and to appearing before the Committee to provide additional evidence concerning the matters raised in our submissions.

Further Contacts

Bibliography

Administrative Appeals Tribunal Canberra, June 2019. See https://jade.io/article/647731

Disability Reform Council Communiqué, 28 June 2019. See [https://www.dss.gov.au/sites/default/files/documents/07%202019/communique-drc-28-june- 2019.pdf](https://www.dss.gov.au/sites/default/files/documents/07%202019/communique-drc-28-june- 2019.pdf)

Joint Standing Committee on the NDIS, General Issues around the implementation and performance of the NDIS, Progress Report, Canberra 2019.

Productivity Commission, Disability Care and Support Inquiry Report, Overview and Recommendations, Canberra 2011.

Productivity Commission, National Disability Insurance Scheme Costs Study Report, Canberra 2017.

Tune, D. Review of the NDIS Act 2013, Removing Red Tape and Implementing the NDIS Participant Service Guarantee, Canberra, December 2019.