22 February 2018
Committee Secretary Joint Standing Committee on the NDIS Department of the Senate P O Box 6100 CANBERRA ACT 2600
Dear Mr Andrews
Submission to the Joint Standing Committee on the
National Disability Insurance Scheme and Market Readiness
Thank you for the opportunity to make a submission to the Joint Standing Committee on the NDIS about the implementation, performance and governance of the NDIS and market readiness for provision of services under the scheme.
About Northcott
Northcott was established in 1929 as the NSW Society for Crippled Children. The Rotary Club of Sydney established the Society with the long term objective to prepare children with disabilities to be included in the community.
Northcott’s vision today is to build and inclusive society where people can live the life they choose. This is achieved by assisting people with disability to develop their skills and achieve their goals – including their potential for independence and ability to participate in their community. Every year Northcott supports over 14,000 people with disability and their families across NSW and the ACT. We employ over 2,000 staff, providing over 100 services from over 150 sites and offices across NSW.
Recently Northcott was successful at acquiring over 100 accommodation and respite service sites in five geographic areas of NSW as part of the NSW Government’s devolution process for the NDIS transition. This means that Northcott is now one of the largest specialist disability service providers within NSW. We work tirelessly with each customer to unleash their potential, supporting and empowering them to be the best they can be now and in the future. Our comments on the Joint Standing Committee’s questions are set out below.
1) Transition to a market based system for service providers
It is Northcott’s position that the market place is not yet developed and that there has been substantial difficulties with both the NDIA and the market development. To date, few if any, service providers are able to make any clear headway with the transition to a market based system. Further support for the market is essential if the NDIS is to provide the support, choice and control that are the aspirations and intent of the scheme.
2) Participant readiness to navigate new markets
Northcott has found that most participants in the NDIS are not ‘savvy customers’. NDIS participants not previously funded under the NSW Department of Ageing Disability and Home Care service, appear to be much more market ready than those who were previously funded under the state based scheme. Northcott’s view is that as the market matures they too will become more able to navigate the new markets. This is already in progress as we see participants moving between providers as they exercise their choices.
Participants could be supported to navigate the new markets if the Coordination of Supports is streamlined. This will help people to navigate the new markets and overcome some of the barriers they face. This is a valuable service for participants in their navigation of the NDIS, but there has not been consistent roll out making the market less responsive and difficult for participants to navigate.
The renewal of plans process has also been a major impediment to the development of new markets and market readiness while at the same time inflicting significant damage on existing markets. The NDIA appear to have a deliberate reliance on the non government sector to fill the unfunded gaps in the market. There is an expectation that service providers will continue to provide services without guarantee of payment during the planning, plan review and plan amendment delays processes. This is detracting from the implementation of the scheme and causes financial stress for both participants and providers as we often have to use our limited resources to support the incomplete NDIS planning process rather than delivering the services.
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3) Development of the disability workforce to support the emerging market
Under the NDIS the workforce needs to grow rapidly but a critical and visible gap for market readiness is the lack of training availability and support for the disability workforce. The entry level qualification is a Certificate III in Individual Support (Disability). Disability support work is complex and the potential workforce must present and be prepared to start work with the necessary skills in place.
Up until recently Northcott had a long standing, dynamic and supported traineeship program that allowed workers to be supported and mentored as they upskilled to the levels required for this complex work. Due to the prohibitive costs associated with traineeships – the most cost effective way for employers to develop their workforce – Northcott recently decided it could no longer offer these trainee pathways.
The lack of a broad based training strategy for the disability support workforce means that training availability is limited, irregular and with unreliable funding sources. The current training environment does not support either service providers or people wanting to join the industry. Northcott and other disability organisations are trying to fill the gaps but have been left to pick their way through a complex web of irregular and unreliable sources of funding sources and processes.
The NSW Smart and Skilled training requirements are major deterrents for both potential employees and disability service providers. Northcott has been successful at accessing some funding through the NSW Smart and Skilled programs but this funding has not filled the necessary gaps. This is because it is occasional and the timeframe to complete the skills training is far too short for a large majority of potential support workers.
In addition, the funding availability is erratic and requires numerous tailored and justified applications for each individual NSW Education Department region where the training may be held. This is time consuming and onerous for service providers seeking to recruit, train and employ additional staff.
Northcott is instead using our resources to focus on pre-employment and skill set programs only. This approach is being reflected in the broader community with the numbers involved in traineeships in the Health and Welfare Support Worker category steadily declining over recent years with a marked decline since the NDIS began.
Many potential new staff are undertaking this training in their own time and at their own expense. However often they have few resources and a low income base e.g. students, people returning to the workforce, and the necessary financial commitment in the absence of traineeships can be prohibitive to completion.
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These market characteristics mean that attempts to fill support worker places are often unproductive and costly with limited success at filling the NDIS workforce gaps.
4) The impact of pricing on the development of the market
Pricing is having a large impact on the development of an effective and efficient market. Service providers are currently working on a fixed price list that has seen little or no movement since the start of the scheme. The market is moving and becoming more efficient but the NDIA is still working on the same pricing assumptions that were developed prior to the scheme implementation.
There appears to have been no planning for the medium to long term pricing for the scheme and this has had a direct impact on the market including the financial viability and capacity of service providers. For example, the current client facing time Pricing does not match the customer needs or market requirements.
As the scheme has been operating for over three years, Northcott believes that there is now enough evidence and understanding of the Australian disability services market to review the assumptions that were made in the development of the scheme. This would provide a more realistic view of the market and pricing situation in Australia, rather than the current extrapolation from similar international schemes e.g. the United Kingdom. It is important that the NDIA use the knowledge they now have to review pricing and develop more realistic pricing structures to meet the needs of the market.
As we are all aware, if the price is not right then market failure follows. The recent crisis in the respite service funding is an example of how pricing and funding for participants is not consistent with how the market operates and how inadequate Pricing can lead to market failure. While this crisis has now been averted, the reality is that in the meantime, respite providers have exited the market leaving a service and skills shortfall that will take a long time to recoup.
Already there are some early signs that market failure is underway in regional areas due to unrealistic pricing structures. This is leading to a loss of skills within the sector that will not be easily recovered. When the market fails the skills base is not easily re-established.
Northcott’s believes that current market viability is being masked because regional NSW is still transitioning from the old bulk funded State based system. We are becoming aware in those areas that are transitioning or have transitioned that the there are early signs of de-staffing, loss of skills and services closing and/or no longer offering disability service supports. These are early warning signs that the
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market is under some stress and that the pricing is not at a level to support viability and a competitive market. These are essential to deliver choice and control to people with disability their families and carers.
5) The role of the NDIA as a market steward
There is clearly a conflict of interest with the NDIA acting as the market steward. However, Northcott is aware that reviews are currently underway that will be examining the role of the NDIA as the market steward.
Generally the NDIA is not operating as an effective market steward. One example of this is that non government organisations are often unable to undertake account management because of the ongoing gaps in the NDIA processes. Participants move between providers (choice and control) and inconsistencies with the plan reviews means that payments are significantly delayed. This leads to further hardship for both providers and participants. More consistency is required from the NDIA in both messaging and profiles.
The NDIA have been slow to respond to feedback, development of the training market has not kept pace with the needs of the scheme and the planning processes have often added to the market chaos rather than worked towards market readiness. The disability service providers have become more efficient and are attempting to respond to the needs of the market. This is however, often obstructed because of slow NDIA responses to the needs of the market and the overly cumbersome processes that seem to be a feature of the scheme to date.
6) Market intervention options to address thin markets,
including in remote Indigenous communities
It appears that there has been little realistic assessment of the investment required to deliver services to rural and remote communities and Indigenous communities. The market remains under developed and will remain so until the further support and realistic pricing becomes available for these communities. It appears that there are no realistic or serious strategies developed to engage with rural and remote and Indigenous communities. This means that service providers are reluctant and slow to engage in these markets.
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Northcott is aware from its previous work with Indigenous and rural and remote communities that before any work can commence it is important to spend time and effort to build relationships and engage with the community. Delivering services to these communities can be difficult and complex and usually involves extensive time and travel.
This necessary effort and commitment is not funded under the current NDIA cost recovery model. This means that there is little incentive for providers such as Northcott to engage with these communities. This is because the support work required to build linkages with these communities prior to being able to deliver the funded services is currently unfunded.
Alternative forms of funding other than direct cost recovery will be needed to encourage service providers to engage with these communities. The market in these communities is small, complex and remote and these all require large investments that are not commensurate with the size of the market. Under the previous bulk funded service systems, providers often cross subsidised services to deliver care to these communities. The current cost recovery model no longer allows this flexibility for providers.
Due to these complexities and the substantial upfront investment required to service these communities, many providers are already making commercial decisions to withdraw from or not enter these markets. This in turn is leading to loss of skills and supports in rural and remote communities that will not be easily replaced and will eventually lead to market failure.
7) The provision of housing options for people with
disability, with particular reference to the impact of Specialist Disability Accommodation (SDA) supports on the disability housing market
There have been substantial administrative issues with both SDA and SIL. Northcott is aware that planners have not been skilled enough to adequately plan to the level of the customer needs for SDA or SIL. Once SDA and SIL components are included in plans, the process for initiating and obtaining SDA and SIL have been inadequate in terms of the market place.
The plan review processes have been slow and cumbersome causing significant delay and hardship for both scheme participants and service providers. In effect although service providers such as Northcott have undertaken the supplier registration process satisfactorily the lack or comprehensive and knowledgeable
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planning has meant that the market place has effectively been trying to match ‘square pegs with round holes’. For example, service providers are unable to effectively house participants in supported accommodation if their needs are either higher or lower than what is available within the actual house. This means that the market is not operating effectively and there has been a significant financial cost for providers.
As the planning process is not yet robust or effective at meeting the needs of scheme participants the market is currently ineffective. This is particularly applicable for scheme participants who have very complex needs. A much higher quality and informed planning process that result in high quality, detailed plans are essential to ensure that the scheme operates as an effective market. To date this is not occurring leaving both service providers and participants outside the market and causing financial stress to both participants and providers.
The market is attempting to fill these gaps with innovative solutions such as NEST. This is an online platform that Northcott Innovation has been closely involved with developing. It assists people with disability to find the home that matches their needs. The system works by matching a user’s unique housing and support needs with a vacant property and relevant service levels that the disability support provider or community housing support provider can offer. When a match is made the person with disability is linked with the housing provider and supported to move into their new home with appropriate support services.
Innovations such as these will support the market but they are ineffective without the other market fundamentals being in place. For example, accurate planning and funding of the necessary supports for the participant.
8) The impact of the Quality and Safeguarding Framework
on the development of the market
Northcott strongly supports the implementation of the Quality and Safeguarding Framework but care needs to be taken to ensure they are not too onerous for providers. Any onerous requirements will grind the market to a halt. There is currently no recognition that the market must not be overburdened if it is to be successful.
The current approach to training the disability workforce is also a major threat to the Quality and Safeguards Framework. Funding is so tight for non government organisations that many can no longer afford to provider traineeships. While this is a cost effective way to train and support new staff, the current environment does not support this approach and this may mean that in the future many providers will not
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be able to support workers to obtain the necessary skills and supports for the industry.
9) Provider of last resort arrangements, including for crisis
accommodation
It is clear that provider of last resort arrangements including for crisis accommodation are a market gap. There appears to have been little planning or support for market readiness. There is no framework or funding available and it appears that service providers are expected to fund these arrangements until such time as medium to long term arrangements can be put in place. Providers can provide these supports but it must be funded appropriately. In the meantime providers will not be able to continue to fund these arrangements without a proper framework and funding.
Yours sincerely
Kerry Stubbs Chief Executive Officer
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