Market readiness concerns for disability service providers | External submission

In short, a much more developed approach to market stewardship is required, consisting of:

the collection and analysis of data to inform government planning and intervention, service provider investment and consumer choice
the roles and responsibilities of government agencies clarified (such as the NDIA, NDIS Quality and Safeguards Commission, state and territory governments and the Department of Social Services)
definition of the circumstances under which the government will intervene in the market
clear rules governing competition and sharp practices
prices that stimulate supply and pay for quality
transactions costs minimised
investment in workforce development and organisational change

The inquiry by the Joint Standing Committee is timely. This submission should be read in conjunction with our ‘State of the Disability Sector Report 2017’.

Transition to a market based system for service providers

The magnitude of the difficulties facing providers is large and, unless addressed, will threaten their ongoing support for the scheme. Numerous reports have highlighted problems. For instance, the government-commissioned report from Robyn Kruk, ‘Independent Review of the Readiness of NDIS for transition to Full Scheme’, states:

In relation to the market and provider readiness, all documentation reviewed and interviewees highlighted high risk in this area. The reviewer recommends both immediate and short-term actions to strengthen mitigation and responses in relation to potential market failure or provider collapse; and to support provider readiness and market development.

The Australian National Audit Office (ANAO) reinforced this view in its November 2016 report on the ‘Transition of the Disability Services Market’, which concluded that the scheme’s implementation is outpacing the preparatory work needed. The ANAO made many suggestions but action on most is not apparent. The sole formal recommendation was to “produce and publish a disability care workforce action plan as soon as practicable”. NDS is not aware of this work being published.

A recent report on ‘Digital Technology in the Not-for-profit Sector’[^4] indicates the disability services sector is struggling with IT. Only 46 per cent of respondents agreed that their information and service delivery systems worked well for staff and management. The CEO of Connecting Up (one of the organisations supporting the research) noted:

As an organisation with a mission to support the IT needs of other Australian not-for-profits, Connecting Up is concerned for those hundreds of organisations…revealed as struggling to keep up with technology.

[^4] Infoxchange, Connecting Up & TechSoup New Zealand 2018, ‘Digital Technology in the Not-for-profit Sector’, p.10

That this struggle appears to be compounded by a comparatively low investment in their IT is an issue that must be addressed urgently, especially for those organisations working within the NDIS who need good technology more than ever.

The Sector Development Fund (SDF) commenced in 2012-13 for four years and then was extended for one year. It should be re-funded and further extended to complete the demanding work required for a successful sector transition to the NDIS across Australia. It makes no sense for the Fund to cease when the NDIS transition is only half-way.

NDS urges Government to commit additional funding (over the next four years) to assist providers with the demanding changes required of them as they transition to the NDIS. Priorities for the use of the Fund should flow from an Industry Plan developed with the sector. At particular risk are small and medium-sized providers, those operating in thin markets, and those providing services to Indigenous people and people from culturally diverse backgrounds.

Participant readiness to navigate new markets

NDS acknowledges the important work underway by the NDIA to reform the participant pathway for the NDIS. Initial feedback from the trial suggests that participants and families appreciate the changes which include face-to-face planning and increased support from Local Area Coordinators (LACs) to assist plan implementation.

Most participants entering the NDIS are not in the trial of the new participant pathway. Disability service providers continue to deliver substantial information, advice and support to the clients and families with whom they have an established relationship in order to prepare them for the NDIS (it is a complex scheme to interpret and navigate and arouses anxiety among some). LACs are time-poor as they work to meet bilateral targets for approved plans for new participants. The pre-planning work falls heavily on disability service providers and it is unfunded.

For some participants support coordination is vital. These include people with complex health or behaviour support needs; families in contact with multiple government agencies; participants with few or no informal carers in their lives; some people with psychosocial disability; participants involved with the justice system; participants with substance abuse; and young participants leaving out-of-home care. Unfortunately, decision-making on when support coordination will be in a participant’s plan (and at what level and number of hours) is not always transparent. The sector would like clearer information on how these decisions are made. Also warranted is a review of the reporting requirements for support coordinators, which are onerous in situations where the hours of coordination are low in number.

The current ‘Find a Provider’ function on the NDIS portal is ineffective. NDS supports the Productivity Commission’s recommendation that the development of an e-marketplace be accelerated.

Development of the workforce to support the emerging market

Data on the disability workforce is limited but there is substantial concern that workforce shortages will hinder the growth of the NDIS. In its report on NDIS Costs, the Productivity Commission concludes:

While estimates of the number of workers required to deliver supports allocated through the NDIS vary, the consensus is that the workforce will need to increase by between 60,000 and 90 000 full-time equivalent employees (FTE) — or roughly double in size …

The evidence to date — at the early stage of transition — is that the workforce is growing quickly, but not fast enough to meet the overall growth target. About 18 per cent growth in FTE employees is required to meet the expected workforce needed for the scheme.[^5]

NDS’s 2017 Annual Market Survey indicates that 57 per cent of providers had extreme or moderate difficulty in recruiting disability support workers in the past 12 months, a number which increased to over 60 per cent for therapists and psychologists.[^6]

Rapid growth means that providers need continually to induct, train and supervise a significant number of new workers. This is especially so since net growth rates mask turnover, which is high in the sector. In the September 2017 quarter of NDS’s Workforce Wizard survey, the turnover of permanent staff was nearly 5 per cent and more than 8 per cent for casual staff. In annual terms, about one quarter of the disability workforce change jobs every year.

In addition, anecdotal evidence suggests that staff without formal qualifications are increasingly being hired, a factor noted by the Productivity Commission:

The trends to date show that providers are already responding to workforce shortages by using less skilled labour. In some cases, this may compromise the quality of care received by participants and could become more widespread as the NDIS is fully rolled out. This, in turn, will reduce the effectiveness of the NDIS, compromise its insurance principles (and increase long-term costs), and in some cases, be a risk to participants’ wellbeing.[^7]

The large growth in the workforce is not supported by the funding necessary to ensure workers provide quality supports; prices for some NDIS supports are too low. Opportunities for staff to engage in learning and development activities, compliance training, mentoring, induction and staff meetings are very limited. A recent report from the University of NSW[^8] found that lack of training was creating additional health and safety risks for workers and participants. Around one-third of CEOs surveyed

[^5] Productivity Commission 2017, National Disability Insurance Scheme (NDIS) Costs, p.335
[^6] NDS 2017, State of the Disability Sector Report 2017, p.49
[^7] Productivity Commission, op. cit., p.349
[^8] Cortis, Natasha et al (2017) Reasonable necessary and valued: pricing disability services for quality support and decent jobs, University of NSW, p.42

also indicated their workers were not paid to attend training and development or to attend team meetings. Additional information on pricing follows.

Impact of pricing on the development of the market

Current NDIS prices don’t adequately reflect the reasonable costs incurred by disability support providers. Market failure will occur if this continues. NDS has provided input to the Independent Pricing Review commissioned by the NDIA’s Board and undertaken by McKinsey & Company. The outcome of the review is not yet public. NDS’s various submissions on the inadequacy of some NDIS prices can be made available to this Committee on request.

NDS’s strong view is that pricing should be revised to reflect evidence-based adjustments in the Reasonable Cost Model that underpins prices; compensation for the additional (transitional) costs imposed on providers by inefficient NDIA systems and processes; and increased variation in prices to reflect the impact of geography, complex support, transport costs and other factors. The NDIA’s approach to pricing has largely failed to do this and, according to the Productivity Commission, failed to stimulate the market:

The National Disability Insurance Agency’s approach to setting price caps to date has hindered market development by discouraging the provision of some disability supports. In some cases, it has led to poor participant outcomes, especially for those with complex needs. The benefits of the National Disability Insurance Scheme will not be fully realised if the Agency continues with its current pricing approach.[^9]

Of concern to NDS, is that the financial sustainability of the scheme is currently prioritised over the market (and prices for supports). Unless addressed, the vision of a market for high-quality disability supports will not be achieved.

NDS supports the Productivity Commission’s recommendation for independent price setting:

The body responsible for regulating the price of supports under the National Disability Insurance Scheme should have relevant capabilities and the necessary resources to set price caps in a manner that is:

transparent, with wide public consultation and publicly available information, including all assumptions used in any pricing models

evidence-based

supported by clear and limited legislative authority

independent

timely, particularly in giving providers sufficient time to phase in changes and be responsive to market conditions[^10]

Centralised price-fixing is inherently problematic and risks an under-supply of services in particular locations, for some groups of people with disability, across

[^9] Productivity Commission, op. cit., p.315
[^10] Ibid., p.328

some service types. NDS would also like to see trials of price deregulation commencing in parts of the market.

Role of the NDIA as a market steward

In its recent report on NDIS costs, the Productivity Commission is critical of the weak government stewardship of the NDIS market and highlights role confusion as part of the problem. It recommends:

The COAG Disability Reform Council should immediately clarify and make public the roles and responsibilities of the Australian, State and Territory Governments with respect to market stewardship (those actions required to define and support the effective functioning of sustainable and enduring markets for participants and providers). This should include clear and transparent reporting of the specific actions and outcomes they are to achieve (including costs, benefits and risks), timeframes and progress towards goals.[^11]

DSS’s recent consultation paper on Market Oversight does not delineate adequately the role of the NDIS Quality and Safeguards Commission and that of the NDIA. It does make reference to Market Oversight Guidelines (forthcoming). These Guidelines may help clarify the stewardship responsibilities of different government agencies.

According to DSS’s paper, the NDIS Quality and Safeguards Commission will perform “a specific function designed to monitor the NDIS market and risks to its efficient and effective functioning; and monitor and mitigate the risks of unplanned service withdrawal”. In NDS’s response we noted that the Commission should also be concerned with planned service withdrawal.

In 2016, several short-term accommodation (respite) providers announced their intention to cease services in response to inadequate prices. The NDIA responded by reviewing and increasing short-term accommodation prices. The Commission and the NDIA should seek to understand why any service is being withdrawn. (There are signs at present that a growing number of providers are planning to reduce their provision of transport, because of financial loss.[^12])

There is currently no established mechanism to alert the NDIA about planned or unplanned withdrawal of services. A role NDS has been performing is to communicate information of this nature to the NDIA when we hear about it. There should be a more systematic way to collect and communicate this information to both the NDIA and the soon-to-be NDIS Quality and Safeguards Commission.

Research and data are essential to inform government’s market stewardship function and assist service providers make investment and expansion decisions. The Productivity Commission also highlights the need for improved data:

[^11] Productivity Commission, National Disability Insurance Scheme Costs, October 2017. Recommendation 10.5
[^12] NDS’s State of the Disability Sector Report 2017 shows 19% of providers plan to reduce or cease their provision of travel assistance in the next 12 months, p.12

…the release of timely, market-relevant data is also needed urgently…A better evidence base would enable a deeper understanding of the market and in turn, inform risk-based market stewardship responses.[^13]

NDS supports recommendations in the Productivity Commission’s report to fund disability data collections. These include Recommendation 8.2 which supports funding:

to continue the business characteristics and benchmarking study currently undertaken by National Disability Services and the University of Western Australia[^14]

The study referred to tracks the financial performance of about 150 disability service providers across Australia. At present it provides unique insights into the financial strengths, weaknesses and outlook of the sector and, if the data collection continues, would be an invaluable source of independent advice to the NDIA and governments as the NDIS expands. NDS supplements this with an Annual Market Survey of more than 500 disability services providers.

Thin markets, including in remote Indigenous communities

There is a danger that the speed of implementing the NDIS will cause serious supply problems in thin markets. NDS has long argued that the NDIS should not be implemented in the same manner right across the country. We maintain this position and urge governments to find less disruptive ways to introduce NDIS principles in some remote areas. Block funding or direct commissioning should be given serious consideration with reporting mechanisms that are designed to indicate how participants’ choice and control are being enhanced and their lives improved.

In the haste to implement the NDIS, the NDIA’s use of co-design diminished. While co-design can add time to the development and testing phase of an initiative, over time it produces a better outcome. Disability service providers have expertise the NDIA could draw on, which could reduce its use of consultants.

In parts of Australia such as the Northern Territory, many providers of disability supports are broader community service organisations with a long-standing history of working well with local communities. The NDIA needs to respect these relationships by working with them to design how the NDIS can work. The knowledge of local service providers should inform where flexibility and local decision-making are necessary to ensure the scheme is effective, particularly in thin markets.

The NDIA has recently made welcome commitments to establish a strategic partnership forum with providers and a reference group to test ideas about improving the provider pathway experience.

In some circumstances (particularly where markets are thin) it will be necessary to make funds available to enable a failing provider to keep operating in the short-term

[^13] Ibid., p.40
[^14] Ibid., p.328

…the release of timely, market-relevant data is also needed urgently…A better evidence base would enable a deeper understanding of the market and in turn, inform risk-based market stewardship responses.13

NDS supports recommendations in the Productivity Commission’s report to fund disability data collections. These include Recommendation 8.2 which supports funding:

   to continue the business characteristics and benchmarking study currently
  undertaken by National Disability Services and the University of Western
   Australia14

Thin markets, including in remote Indigenous communities There is a danger that the speed of implementing the NDIS will cause serious supply problems in thin markets. NDS has long argued that the NDIS should not be implemented in the same manner right across the country. We maintain this position and urge governments to find less disruptive ways to introduce NDIS principles in some remote areas. Block funding or direct commissioning should be given serious consideration with reporting mechanisms that are designed to indicate how participants’ choice and control are being enhanced and their lives improved.

In the haste to implement the NDIS, the NDIA’s use of co-design diminished. While codesign can add time to the development and testing phase of an initiative, over 时间它 produces a better outcome. Disability service providers have expertise the NDIA could draw on, which could reduce its use of consultants.

The NDIA has recently made welcome commitments to establish a strategic partnership forum with providers and a reference group to test ideas about improving the provider pathway experience.

In some circumstances (particularly where markets are thin) it will be necessary to make funds available to enable a failing provider to keep operating in the short-term

13 Ibid., p.40 14 Ibid., p.328

while other support arrangements are found for participants. State governments have done this in the past, but it is unclear how (and under what circumstances) this would occur when the transition to the NDIS is complete.

Provision of housing options, with particular reference to SDA

The NDIS provides opportunity for substantial improvement in the quality of housing for thousands of people with disability eligible for the scheme. Access to suitable, stable and affordable housing is critical to the wellbeing and employment of people with disability.

As part of the NDIS, Specialist Disability Accommodation (SDA) payments have started to flow. This should stimulate investment in housing for people with high and complex accommodation support needs (about 6% of NDIS participants).

Many other NDIS participants will also be seeking affordable and accessible housing. NDS notes the COAG commitment in 2016 to “continuing to discuss potential reforms in this critical area, including efforts to improve housing supply and provide sustainable funding for homelessness services.” We also note the Building Ministers agreement to hold further discussions on the costs and benefits of applying a minimum accessibility standard for private dwellings constructed in Australia. The introduction of such a standard is overdue.

The Commonwealth has a key role to play in encouraging the construction of affordable and accessible community housing for people with disability. Although the responsibility to address disability housing challenges is shared, the Australian Government can facilitate collaboration between all levels of governments, developers, community housing providers, disability providers, families and banks. Housing for people with disability needs to be on the agenda of all these groups.

The average income of Australians with disability is lower than the community average and the risk of poverty is high for those on the DSP. A re-configured NRAS- like scheme could help meet the housing needs of this group of Australians.

NDS recommends that the Government introduces a national funding program to stimulate the construction of affordable and accessible community housing that prioritises people with disability (to be implemented in co-operation with state, territory and local governments).

With respect to SDA, NDS notes several barriers to the growth of this accommodation: a lack of data to support the development of the market; lack of transparency on NDIS participant eligibility for SDA; inconsistent processes and timelines for receiving SDA payments; and the complexity of rules. These issues combine to present a risk to the growth of specialist housing for people with high and complex needs.

Disability providers and developers largely rely on their own research and interpretation of the SDA Rules to inform development decisions. Their conclusions may be flawed. NDS is aware of instances where owners of SDA property have entered into agreements with participants, with the understanding that they will be

eligible for SDA. Some of these participants—now residents—were later found to be ineligible and the property owner could not claim SDA payments.

Furthermore, detailed data and market information are required to support the development of appropriately targeted SDA dwellings. Ideally, market information should detail where the demand is and what building types and design levels are required. Without this information, a property may be built where there is not demand for that type of building—or there may be reluctance to develop at all.

The process for determining participant SDA eligibility is not clear which makes it difficult to identify potential residents (with a flow-on impact on investment decisions). It is not clear whether participants can be deemed SDA-eligible if they have not identified an SDA-enrolled dwelling to move into. A developer seeking to develop purpose-built accommodation has no guarantee of participant eligibility to support their development decision.

The systems and processes for SDA registration and enrolment of dwellings need improvement. Registration and enrolment are often lengthy and the payment of SDA supports is inconsistent or delayed. NDS is aware that some providers have recently received SDA back payments for 6 to 12 month periods, which have been processed manually. If they persist, payment delays will erode investor confidence.

Investment in SDA properties appears to be slow. While smaller community sector- orientated banks have indicated an active interest in SDA, major banks are approaching SDA with caution and are hesitant to provide finance due to a lack of certainty about the future of the market. The current risk-averse approach of major banks is further impacted by the lack of market data available to providers, the periodic pricing reviews which are due to be conducted every five years15 and current payment issues providers are experiencing for existing SDA dwellings.

Impact of Quality and Safeguards on the development of the market

NDIS participants have the right to expect high-quality supports and be free from abuse, neglect, exploitation, violence or other harm. Giving practical effect to this right depends on an ecosystem of actors, resources, rules and expectations. These include general systems of law and law enforcement, natural supports, individual capacity-building strategies and organisational cultures.

The NDIS Quality and Safeguards Commission will be a critical element of this ecosystem but, to be effective, will need to work closely with the other elements.

NDS is committed to supporting disability service providers to provide high-quality supports in safe environments. Our Zero Tolerance initiative assists disability service providers to understand, implement and improve practices which safeguard the rights of people they support. Built around a national evidence-based framework, Zero Tolerance is:

a way for organisations to understand actions to prevent and respond to abuse, neglect and violence of people with disability

15 NDIA, Specialist Disability Accommodation: Decision Paper on Pricing and Payments, June 2016, p. 17

a clear message that abuse, neglect and violence are not okay
a collection of resources to educate and train staff at all levels to understand their responsibilities in preventing and responding to abuse
a way of working collaboratively within and outside the disability sector to prevent and respond to abuse

We look forward to working collaboratively with the new NDIS Quality and Safeguards Commission to ensure NDIS participants receive high-quality supports underpinned with appropriate protections for their rights and safety.

NDS is very concerned about the disparate approaches to quality and safeguarding according to who manages an NDIS participant’s funding. Participants who self- manage their funding (or who have their package managed by a family member) will be able to purchase supports from unregistered providers. Unregistered providers will not be audited against quality standards or have to report serious incidents to the Commission. Unregistered providers can employ workers who have not been given an NDIS National Worker Screening clearance.

Given that the NDIA is promoting self-management (with the hope that the proportion will reach 40%), a significant proportion of NDIS participants could be exposed to unacceptable risks. The disparity in rules would also establish a two-tiered market, with one tier more regulated than the other and bearing higher compliance costs.

Over time, the NDIS will see more people with disability being supported in unsupervised environments and in situations where it is more difficult to control outcomes.

NDS opposes the arrangement that allows self-managing participants to employ the services of unregistered providers. We maintain that all providers should be registered and that regulation and reporting requirements should be proportionate to risk. An exception should be self-employment, which requires the participant to take on the responsibilities of an employer.

Provider of last resort arrangements and crisis accommodation

Emergencies can result from a family carer being unable or unwilling to continue to support a person with disability (whether for a short or longer term). This may be because they become unwell, sustain an injury or feel over-burdened by their caring responsibilities. Emergencies also arise due to the person with disability having escalating challenging behaviours or because they unexpectedly need additional personal care or household assistance.

Emergencies will arise for participants of the NDIS, for people who become participants of the NDIS, or for people with disability who have a temporary need for assistance but who do not become participants of the NDIS at this time. Emergency responses for people with significant disability need to be available regardless of whether they are an NDIS participant.

Associated with emergency response is the need for a provider to be willing and able to supply supports at short notice (often this is a need for short-term accommodation). Presently most, if not all, state and territory governments have

processes for emergencies, but these may cease as the NDIS is implemented. Governments should outline their emergency support arrangements as soon as possible (ideally through establishing emergency response agreements with a few disability support providers within their jurisdiction).

The lack of information about ‘provider of last resort’ arrangements within the NDIS is concerning. Information should be released as soon as possible.

February 2018

National Disability Services is the peak industry body for non-government disability services. It represents service providers across Australia in their work to deliver high-quality supports and life opportunities for people with disability. Its Australia-wide membership includes about 1000 non-government organisations which support people with all forms of disability. Its members collectively provide the full range of disability services—from accommodation support, respite and therapy to community access and employment. NDS provides information and networking opportunities to its members and policy advice to State, Territory and Federal governments.