NDIA Accountability Project

Sustainability of NDIS funding and links to aged care

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Submission on the NDIS Amendment Bill

Richard Madden AM, PSC, BSc, PhD, FIAA

University of Sydney

Introduction

My focus in this submission, as it was in my submissions to the NDIS Review, is on sustainability of the NDIS.

The NDIS is a unique national approach to the provision of supports to people with significant needs for support due to disability. Its achievements to date in improving the lives of people with a disability, and their participation in the community, have been well documented.

All of this progress, and its continuation, depends on the sustainability of the NDIS. The Australian community needs to weigh up the financial cost of the NDIS against not only its benefits for people with disability, but in comparison to other vital areas of social expenditure such as education, health, aged care, housing and justice.

My submissions to the NDIS Review focused on a number of drivers of NDIS expenditure growth:

  • The growth in the number of new participants, especially children
  • The continuing growth of early intervention participants and the small number of such participants who have exited from the NDIS
  • The impact of participants aged 65 and over in the NDIS.

The NDIS Amendment Bill opens the way for substantial progress on the first two of these topics, which I support. I make some suggestions for additional amendments in these areas.

The Bill does not address the impact of those aged 65 and over. This is the age group where participant numbers and expenditure are projected by the NDIS Scheme Actuary to grow fastest. As well, the Minister in his Second Reading Speech spoke of establishing a range of foundational supports in conjunction with the States and Territories, but said nothing about links between the NDIS and aged care, an area of Australian Government responsibility. I will address this in more detail in the submission.

The Bill’s introduction of a reasonable and necessary budget is a welcome move to determine NDIS funding for each participant. Determining reasonable and necessary budgets will need to be done consistently across participants, be understandable to the participant, be equitable across the NDIS and, importantly, be done efficiently.

Growth in new participants

The growth is the number of NDIS participants through continuing entry of new participants is now well documented in the NDIS Annual Financial Sustainability Reports.

Deletion of Access Lists

The deletion of existing Section 27, specifically sub-section (1)(b), removes the basis for Access Lists based on diagnosis. The NDIS Review Final Report recognised that these provided an automatic access route to becoming an NDIS participant. Access Lists have provided a short-cut path to NDIS participation, without regard to the functioning criteria set out on Sections 24 and 25 of the NDIS Act. The Review proposed that Access Lists be removed from the NDIS (Supporting Analysis).

Removing Access Lists is not only essential for NDIS sustainability: it is in line with the principles of the NDIS Act (section 4).

However, the Review recommendation to remove Access Lists also states:

The current Access Lists should not be removed until the other changes proposed are in place.

This caveat on the recommendation to remove Access Lists would leave in place a short cut access pathway to the NDIS. It relates to the need to establish foundational supports for those found not to be eligible to become an NDIS participant. We do not know the proportion of participants whose eligibility to become a participant has been through the Access Lists, especially List A and List D. But the unexpectedly large number of children becoming participants, and the role of autism diagnoses in this result, suggests urgent action to stop the use of Access Lists is needed to contain NDIS growth in participants and expenditure.

Significant disability

The NDIS was designed to assist support people with a significant disability:

Productivity Commission 2011, Overview P2:

Key points

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  • Most families and individuals cannot adequately prepare for the risk and financial impact of significant disability. The costs of lifetime care can be so substantial that the risks and costs need to be pooled.
  • There should be a new national scheme — the National Disability Insurance Scheme (NDIS) — that provides insurance cover for all Australians in the event of significant disability.

Minister’s Second Reading Speech 27 March 2024 -

  • Every Australian deserves the peace of mind of knowing that if they or someone they love acquires a significant and permanent disability the NDIS will be there for them. (Hansard, P20)

  • What we have to do is reform the National Disability Insurance Scheme Act of 2013 (the NDIS Act) and we have four goals: … 2) that the scheme be restored to its original intent to support people with significant and permanent disability (Hansard, P23)

  • If you have a significant and permanent disability which has quite an impact on your functioning, you will be covered by the NDIS. (Hansard, P26)- The NDIS Act did not use the term ’significant’. Nor does the current Amendment Bill.

The NDIS Review called for the introduction of a definition of ‘substantially reduced functional capacity’ for section 24 of the NDIS Act, ‘substantial developmental delay’, and ‘likely to benefit’ for section 25 of the NDIS Act. The Amendment Bill does not include these definitions. Any definitions subsequently introduced should make clear that, to become a participant in the NDIS, a person should have a ‘significant disability’.

An alternative option would be to amend the Objects of the Act (section 3). The Disability requirements (section 24) and Early intervention requirements should also be clear that participants should have a significant disability.

The Australian Bureau of Statistics definitions of severe and profound disability in its Survey of Disability, Ageing and Carers (SDAC) may help in referencing or defining ‘significant disability’:

  • Profound limitation – greatest need for help, that is, always needs help with at
    • least one core activity
  • Severe limitation – needs help sometimes or has difficulty with a core activity

Core activities are: - Communication - Mobility or - Self-care and/or - A schooling or employment restriction

The Committee should note that the Productivity Commission’s original cost estimates for the NDIS in 2011 were based on SDAC estimates of people with severe or profound disability.

Proposal

It is suggested that the Committee recommend that there be a provision in the NDIS Act to make clear the intent that NDIS supports are intended for people with significant disability, both in the interests of sustainability of the NDIS and to clarify the respective roles of foundational supports and the NDIS.

Disability Requirements Or Early Intervention Requirements

The Amendment Bill proposes to amend Section 21(2) as follows:

‘For the purposes of paragraph (1)(c), the CEO must separately consider and decide:

    (a) whether or not the prospective participant meets the disability requirements;
 and
    (b) whether or not the prospective participant meets the early intervention
  requirements’

This provision is welcome.

The Explanatory Memorandum states that ‘In the long term, this will enable the establishment of the separate early intervention pathway recommended by the NDIS Review.’ This too is welcome.

For the sustainability of the NDIS, it is essential that participants who are in the NDIS because they meet the Early intervention requirements leave the NDIS once the Early intervention requirements are no longer met. Proposed section 30A deals with this issue:

30A Requirement To Consider Status Of Certain Participants

Circumstances In Which Ceo Must Consider Participant’s Status

(1) If a circumstance prescribed by the National Disability Insurance Scheme rules for the purposes of this subsection applies in relation to a participant, the CEO must:

    (a) decide whether or not the participant meets the early intervention
     requirements; and
    (b) if the CEO decides under paragraph (a) that the participant does not meet the
      early intervention requirements—decide whether or not the participant meets
      the disability requirements; and
     (c) if the CEO decides under paragraph (b) that the participant does not meet the
      disability requirements—revoke the participant’s status as a participant in the
    National Disability Insurance Scheme.

Retention of Participants Who Entered Through Satisfaction of the Early Intervention Requirements

Retention of participants who entered through satisfaction of the Early intervention requirements has been a substantial reason for the growth in the number of NDIS participants. At 31 December 2023, 208,891 active participant plans were reported as early intervention (section 25) participants, out of the total 646,449, 32.3 % of all participants (NDIS Quarterly Report December 2023, Supplement E, Table E2). Over the life of the NDIS, a total of 13,960 early intervention participants have exited from the NDIS (op cit, Table E3).

At present, there is no evidence that participants who have become participants through initially meeting the Early interventions requirements now meet the Disability requirements, nor that they continue to have an active early intervention plan; it is just reported that they have an active plan.

For the sustainability of the NDIS, there should be a clear expectation in the NDIS Act that Early intervention participants should exit the NDIS once their early intervention plan is complete, unless the participant at that point meets the Disability requirements or another Early intervention plan is justified in light of the outcome of the completed program.

To ensure that the NDIS operates in this way, the NDIS Act should establish two separate classes of NDIS participants:

  • i) Those who are participants because they have met the Disability requirements
  • ii) Those who are participants because they have met the Early intervention requirements.

This essential separation of the two classes of participants should not be left to rule making: it should be specified in the Act.

NDIS Participants Aged 65 and Over

A person must be aged under 65 to become an NDIS participant. But existing participants remain in the NDIS after reaching the age of 65.

The number of participants and expenditure on these participants is projected to rise faster than for the NDIS as a whole:

NDIS Growth from 2022-23 to 2025-26 0-64 65+
Average participants 25.6% 66.2%
Expenditure 43.9% 99.7%

Source: NDIA,2021-22 Annual Financial Sustainability Report Table 5.1 and Table 5.4, accrual basis

The very rapid growth in participant numbers and expenditure for those aged 65 and over presents a clear challenge to the sustainability of the NDIS.

There has been, quite rightly, significant emphasis on the need for collaboration between the Commonwealth and the States and Territories to establish a range of foundational supports in mainstream State and Territory service areas such as health and education. The same arguments apply in relation to aged care, also a mainstream service, but the responsibility of the Commonwealth rather than States and Territories.

At present, if an NDIS participant accesses an aged care service, they become ineligible to remain in the NDIS. Sub-section 29(1)(b) provides that ‘A person ceases to be a participant in the National Disability Insurance Scheme … when the person enters a residential care service on a permanent basis, or starts being provided with community care on a permanent basis, and this first occurs only after the person turns 65 years of age.’

The NDIS review analysed considered participants aged 65 and over in some detail (NDIS Review Supplementary Analysis, P175-190). It recommended a move to dual participation in the NDIS and aged care after age 65.

Action 2.11 of the NDIS Review Final Report proposes:

The Australian Government should implement legislative change

to allow participants once they turn 65 to receive supports in both the NDIS and the aged care system concurrently and clarify when aged care supports are reasonable and necessary.

The National Disability Insurance Agency and the aged care system should institute a joint model of cooperation, including a shared assessment model. This should ensure greater choice for older participants. This will require the Australian Government to change the clause in section 29(1)(b) of the National Disability Insurance Scheme Act 2013 and allow participants over the age of 65 to have expanded access to aged care system supports, including residential aged care, while remaining eligible for complementary NDIS supports.

This proposal is supported. The Amendment Bill does not alter Section 29(1)(b).

The NDIS Amendment Bill explicitly draws on the UN Convention on the Rights of Person with Disabilities in the proposed Section of the Act defining NDIS supports. The Committee should note clause 19(c) of the Convention: ‘Community services and facilities for the general population are available on an equal basis to persons with disabilities and are responsive to their needs.’ Section 29(1)(b) does not appear to be consistent with this provision of the UN Convention.

It is notable that the Disability Support for Older Australians (DSOA) program, a responsibility of the Australian Government’s Department of Health and Ageing, operates on an integrated basis with the Government’s aged care programs. DSOA provides disability supports for people who were receiving disability supports from States or Territories before the NDIS commenced but were ineligible for the NDIS because they were over the age limit (age 65, lower for Aboriginal and Torres Strait Islander people).

‘The DSOA program interfaces with the broader aged care programs and is not intended to replace those that are available through other Australian Government aged care funded programs.’ (DSOA Program Manual, February 2024, P8)

DSOA provides a limited specified range of disability supports, which supplement aged care programs.

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The structure of DSOA provides a good base for NDIS participants who have passed the age of 65.

The NDIS Review recommended that DSOA cease to operate and remaining DSOA participants join the NDIS. In principle, this seems appropriate (NDIS Review Supporting Analysis, P191). Given the open-ended nature of the NDIS for people over age 65, such a change should not occur until the integration of the NDIS and the aged care program is in place.

Proposal

The Committee should consider recommending that Section 29(1)(b) of the NDIS Act be removed as proposed by the NDIS Review.

Once NDIS participants are not barred from receiving benefits from the aged care system, the aged care system should provide NDIS participants with support on the same basis as for other Australians, in line with the quoted provision of the UN Convention. The current provisions of the Disability Support for Older Australians program provide a possible model.

Having the aged care system recognise its responsibilities to NDIS participants will have an impact, possibly substantial, on the sustainability of the NDIS.

Reasonable and necessary budgets

The introduction of reasonable and necessary budgets is supported.

The Bill provides that the amount of the reasonable and necessary budget for a participant will be determined according to section 32L:

  • The CEO must arrange for an assessment of a participant’s need for supports to be undertaken as soon practicable after the CEO commences the preparation of a plan for a participant

  • The assessment must be undertaken using the assessment tool(s) determined by the Minister.

Designing the assessment tool(s) to be used for assessing need for supports will be a complex process. Many existing tools assess a person’s difficulty associated with their disability rather than their need for supports.

It is vital that assessment tool(s) chosen be firmly based on the World Health Organisation’s International Classification of Functioning Disability and Health (ICF). The ICF is a framework and classification system for organising and documenting information on functioning and disability. The ICF provides a standard language and conceptual basis for the definition and measurement of disability. It provides classifications for body functions, body structures, activities and participation, and environmental factors.

It is important to put reasonable and necessary budgets in place as quickly as possible for existing participants, to give certainty of funding, to allow more flexibility in how a budget is spent, to introduce rigour into the timing of plan and budget reassessments, and to improve the sustainability of the NDIS.

The approach needed is likely to be different for disability participants and early intervention participants. Comment below focuses on disability participants.

Another important consideration for an assessment tool is its applicability to Australia and the Australian environment (such as urban/regional/rural distinctions and the availability of informal support, and increasingly, mainstream or foundational supports).

Assessment Instruments

The NDIS Review specified four possible assessment instruments for support needs:

  • Camberwell Assessment of Need (CAN) and Camberwell Assessment of Need for adults with Developmental and Intellectual Disabilities (CANDID)
  • Care and Need Scale (CANS)
  • Instrument for the Classification and Assessment of Support Needs (I-CAN)
  • Supports Intensity Scale Adult version (SIS-A)

CANS is designed for people with traumatic brain injury, SIS-A for people with intellectual and developmental disability, CANDID for people with intellectual disability and CAN for people with psychosocial disability. I-CAN is applicable to all adults with disability, is based on the ICF, and has been developed and widely used in Australia.

Assessments tools for children need separate consideration. SIS has the adult version referred to by the NDIS Review (SIS-A) and a children’s version SIS-C.

I-CAN has been analysed for use in determining budgets for supports (Does a Measure of Support Needs Predict Funding Need Better Than a Measure of Adaptive and Maladaptive Behavior? Samuel R. C. Arnold, Vivienne C. Riches, and Roger J. Stancliffe, American Journal on Intellectual and Developmental Disabilities 2015, Vol. 120, No. 5, 375–394).

The analysis was based on the I-CAN Brief Research Version which incorporated a summary of overall support needs, not currently included in I-CAN. I-CAN-Brief Research version is a direct measure of support needs, a shortened version of the full I-Can. In this study, it is reported that it took approximately 35 minutes, on average, to administer, and typically involved the person and one or two support persons.

The source of support was found to be very significant in the analysis: informal, mainstream or disability specific.

As the NDIS Review noted, I-CAN, customised specifically for the Disability Supports for Older Australian (DSOA) Program, is used by the Department of Health and Ageing to set budgets for participants in the DSOA program. This program provides specific supports for people who were in receipt of State/Territory funded supports when the

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NDIS commenced, but who were not eligible for the NDIS because they were aged over 65. DSOA supports operate in conjunction with mainstream aged care programs.

These results with a long established Australian assessment tool suggest that I-CAN, based on the ICF, could be a good base for an assessment tool on which to base reasonable and necessary budgets for adults. Further testing would be necessary before a decision could be made. As I-CAN is currently a proprietary tool, it would be essential to ensure it was fit for NDIS purposes, in the ownership or formal control of the Australian Government, and that training in its use is widely available.