Kymberly Martin

NDS CEO: Still risks ahead for the NDIS

When it comes to the National Disability Insurance Scheme (NDIS) there is good news but it is being clouded by difficulties.

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As National Disability Services (NDS) CEO Dr Ken Baker put it at the NDS NSW Conference last week, “none of these problems is insurmountable.”

According to Baker there are four key risks facing the NDIS. The first is supply, when participants are unable to get reasonable and necessary supports when and where they need them. The second is quality, if the supports people receive are inferior and people with disability are exposed to harm. The third is cost. So far the cost of the scheme is being contained within the projected budget of $22 billion a year, but parliament has not yet approved legislation to secure a future revenue stream.  While legislation to lift the Medicare levy is still sitting before the Senate subject to negotiations with cross benchers, there is uncertainty, he said. Cost pressures also arise from unclear boundaries between federal and state responsibilities, with costs shifting from one jurisdiction to another. An example is when a non-verbal NDIS participant enters hospital.  “It often makes sense for the disability support worker who knows the participant to accompany them to assist with communication, but who pays? Strictly speaking, NDIS payments stop at the hospital door and the health system pays after this point, but that doesn’t always happen.” The fourth issue is around timelines and the high number of approved plans that need to be achieved at various points.

As Baker sees it, a lot attention at a political level has been paid to the risks of cost blowout and not meeting timelines, but the more important risks relate to supply (market failure) and quality. “These are complicated risks that deserve immediate and sustained attention. That’s starting to happen. We have the recent Productivity Commission report echoing many of the concerns of the sector. A report from the Joint Standing Committee on the National Disability Insurance Scheme, published this week, expressed similar concerns, such as the need for a strategy to address thin markets, transport issues, the inconsistent quality of plans, housing shortages and adequate pricing, particularly for people with complex support needs.”

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Market stewardship – getting the approach right

Baker said the risks relating to supply and quality point to the importance of market stewardship, the actions required to ensure sustainable and enduring markets for participants and providers.  In his opinion poor market stewardship leads to market failure. While there appears to be a high supply of NDIS registered providers (around 10,000), he pointed out that half are inactive, some are single organisations with multiple registrations and 40 per cent are sole traders. ”Moreover, market failure will not be uniform. It will occur in regional pockets or with a particular service type or within specific groups of people with disability.  It requires a sophisticated mechanism to monitor markets to ensure the early warning signs of failure are picked up and responded to before failure occurs.  Market failure hurts providers; but worse than this, it affects vulnerable people with disability.”

Other elements of market stewardship include adequate pricing, not just to cover costs but to stimulate expansion, which is vital if the NDIS is going to meet demand and pay for quality.  “Providers have to run their organisations efficiently, but at the same time not be forced to compromise on the quality of support they provide. We need to minimise transaction costs and ensure that interactions with the National Disability Insurance Agency (NDIA), its systems and its processes work better than they do at present.”

Workforce development and organisational change are critical elements to rolling out a quality system. “The question is how much can regulation do and how much is driven by organisational culture, awareness and education. I think we need to agree that the balance is certainly on the side of the latter. Regulation alone does not deliver quality and safe guarding,” he said.

A key element of market stewardship, also referred to in the Productivity Commission report, is that government agencies need to define their roles more clearly. “There is a lack of clarity about who is responsible for what, whether it be the state or territory, the Department of Social Services, the NDIA or the new Quality and Safeguards Commission.  Failure to sort this has impeded progress in these areas.”

According to Baker there needs to more work on defining under what circumstances the NDIA or another entity intervenes in the market. “There is work on developing a national framework for this too but it needs to be finalised.”

The recent NDS State of the Sector report signalled some early warning signs of market failure with a clear indication that if the NDIA had not responded to the impending short term accommodation crisis and increased pricing substantially, many providers would have ceased supplying short term accommodation, he said. “Similar signs are sitting there for transport with a significant number of organisations saying that unless providers receive adequate payment they cannot afford to continue to provide transport services.”

There are warning signs too about a dampening of business confidence. “Two years ago 68 per cent of providers said they were planning to expand in the year ahead; that now has dropped to 58 per cent.” Why?  “Difficulties with current systems, high transaction costs, concerns about providing services at current pricing, uncertainty about key policy areas, workforce shortages and lack of information to assist providers to make investment decisions.”

Baker said good market stewardship requires “finding the right point on a continuum between, at one extreme, open competition, no enforced standards and no barriers to entry and, at the other extreme, heavy regulation and government control of everything. We don’t want either of those extremes. We want to land somewhere in the middle that balances competition and regulation, freedom and protection.”

As for the role of IT, a recent survey of 340 not-for-profit organisations (NFPs) across the sector found that of the disability service providers who responded only 46 per cent said they had adequate systems to function within the ‘new world’, and were spending 36 per cent less per employee on  digital technology compared to other  NFPs.  “A critical feature of any modern business is the capacity to invest in a sophisticated IT system and clearly many disability service providers lack that financial capacity,” Baker said.

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