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Joint Standing Committee on the National Disability Insurance Scheme
14/03/2018
Market readiness for provision of services under the National Disability Insurance Scheme

LEE, Mr Desmond, Regional Manager, Queensland North, National Disability Insurance Agency

NEVILLE, Ms Liz, Branch Manager, National Disability Insurance Agency

Committee met at 09:46

CHAIR ( Mr Andrews ): Ladies and gentlemen, I now declare open this hearing of the Joint Standing Committee on the National Disability Insurance Scheme for the inquiry into market readiness under the NDIS. These are public proceedings, although the committee may determine or agree to a request to have evidence heard in camera.

I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee. Such action may be treated by the Senate as contempt. It is also contempt to give false or misleading evidence to a committee. If a witness objects to answering a question, the witness should state the ground upon which the objection is taken. The committee will determine whether it will insist on an answer, having regard to the ground which is claimed. If the committee determines to insist on an answer, a witness may request that the answer be given in camera. Such a request may be made at any other time.

Could I please remind those contributing that you cannot divulge confidential, personal or identifying information when you speak. If you wish to supplement your evidence with written information, please forward it to the secretariat after the hearing.

I welcome Ms Neville and Mr Lee. Do you have anything to say about the capacity in which you appear? I then invite you, if you'd like, to make an opening statement.

Ms Neville : I'm the branch manager of provider engagement with the market providers and sector development division within the NDIA.

Mr Lee : The Queensland North region for the NDIA is Gladstone north.

Ms Neville : I'll make some opening statements. I would like to acknowledge the traditional custodians of the land on which we meet today and pay my respects to their elders past and present.

The NDIS continues to grow at a fast pace and on a large scale during the transition period. Overall, more than 142,000 participants have had a plan approved since the scheme began. The number of participants has grown by an average of 29 per cent per quarter since the end of the trial. Likewise, 12,328 providers have been approved to deliver NDIS supports. The number of providers has grown by an average 24 per cent per quarter since the end of the trial.

This growing marketplace is diverse. It includes existing providers, some of whom are understandably being challenged by the complexities of unwinding block funding. Similarly, there are new providers looking to increase their visibility in this marketplace, with 42 per cent of registered providers operating as individual or sole traders.

During this significant period of growth, the NDIA continue to work on a wide range of issues that are critical to developing a competitive market with innovative supports, which is to say that we are concerned about the market developing in the right way. This includes consideration of options to address thin markets, including in remote Indigenous communities.

The NDIA has produced two notable publications since its submission to this JSC on market readiness, and I just want to spotlight those briefly. One is that we published our report on the review of the NDIS pathways at the end of February. That was a report that explored all of the challenges that had been experienced during the transition period, largely associated with our operating model and the experience of participants and providers under the scheme, and identified the opportunities for responding to some of those challenges. For participants, this includes much greater emphasis on face-to-face engagement in the development of all plans, a consistent point of contact in the LAC, a stronger focus on other types of support and the use of plain English in plans. It also includes tailored pathways for Indigenous, psychosocial, rural and remote participants as well as participants from culturally and linguistically diverse backgrounds. Likewise, providers can expect more consistent information on policies and guidelines, a reduction in administrative burden using the portal, more straightforward registration processes, help in connecting with participants, and being notified of important changes.

A second publication of relevance to this inquiry was a couple of weeks ago. We released the Independent pricing review, which was undertaken by McKinsey & Company, as well as our response to that review, which gave in-principle support to all of the report's 25 recommendations. The NDIA believe there is much work to be done to continue to prepare the market during transition and in readiness for the full scheme, but we believe these two publications are quite significant in terms of the program of work that is implied in taking forward implementation of those recommendations.

Finally, I would note too that the Commonwealth government as a whole has tabled its response to recommendations made by the JSC on the provision of NDIS services for people with psychosocial disability.

CHAIR: Thank you, Ms Neville. Mr Lee, do you want to add anything?

Mr Lee : No.

CHAIR: Thank you. Can I lead off then. Being here in North Queensland, we have the opportunity to try and understand these issues around market readiness in a more remote part of Australia. Are there any lessons so far from the experience here?

Mr Lee : Yes, I would say absolutely. As Liz mentioned in her opening statement, elements of the scheme are obviously in a very developmental stage. We've certainly learned through the implementation of the scheme in North Queensland. We've adopted different practices and approaches when it comes to bringing folk into the scheme in rural and remote areas. Our processes in those spaces are far more facilitated, and we tend to partner with local organisations who have trust and a relationship with participants at that local level or that place based level. We've found more relative success with that kind of approach in rural and remote locations.

We certainly grapple in those spaces with the nexus between standing up market demand versus the availability of supply in those places. As we well know, the existing Queensland disability system didn't have great reach into rural and remote locations, so one of our big challenges, we know, is: how do we grow market in those locations? We have been working on some projects to test how we can facilitate a market response in some of these locations.

A good example is a project that we're embarking on in the Doomadgee and Mornington Island communities, both discrete Indigenous communities. Both have small service systems that do different types of community and social services in those places, but none of them have a dedicated disability service system or a supply of disability services. In this project we're running, we're looking at how we can work with trusted local organisations that do work in the human services space and that understand the provision of personalised services directly to people and families—how we can work with them to stand them up as providers in those locations while simultaneously building the market demand to create incentive for those organisations to get involved in servicing under the scheme. It's early days for us on that trial, but through that trial we anticipate we'll learn a lot about what kinds of support non-agency providers require to get involved in providing services under the scheme.

CHAIR: The challenge of providing services to more remote areas is nothing new, but the tension that arises under this scheme is that it's premised on the basis of individual control and decision about the delivery of services. If there are only a limited number of services that can be delivered, and that's also subject to pricing mechanisms within the scheme itself, one imagines that, in a significant number of instances, there's going to be this clash between the individual seeking services and the inability to provide those services either because they're not available or because the cost of providing the service is too great. I'm interested in how we try and navigate that tension, which is obviously going to occur. It's not just in remote areas. You don't have to be far outside a capital city to strike some of these issues, but obviously it's much more acute the further away you get from major centres of population.

Ms Neville : Yes, and I think that some of the recommendations in the Independent pricing review go to this issue. They're quite holistic in scope. Those that I think speak specifically to this issue are a commitment that the agency will undertake to explore quotation for services being delivered in rural and remote areas, which is quite new and effectively brings us to a greater acceptance about the limitations of individualised funding in certain contexts. Also, greater allowance for travel, visits, in regional and rural locations is being permitted in one of the recommendations that we are looking to take forward quite quickly. Similarly, we have some greater accommodation for cohorts associated with having greater complexity in terms of either multiple statutory involvement or behaviours of concern of that type, so we're looking at more of a tiered pricing model to look at some of those cohorts. So I think what we're seeing is greater nuancing of our pricing controls to accommodate the diversity in the scheme.

CHAIR: Has the agency done work on what I might describe as a trigger for market failure? The challenge here is to avoid a market failure, but avoiding a market failure might mean some different sort of intervention. Otherwise, you could allow the market to just find its own level, but the result of that might be that services that are currently or have previously been provided are no longer able to be provided, so participants are worse off because the market has failed. I'm not saying this is easily achieved, but one would think that there should be some work being done on what that trigger point is and an ability to identify it before it occurs and therefore intervene in other ways. Obviously, you don't want to intervene, given the premise of the system, before you need to, but I think common sense tells us, and past experience tells us, that there will be occasions when such intervention is required.

Ms Neville : Again, this is referred to in the independent price review and aligns to some in-flight work that we have underway around the production of a market intervention framework. You may be aware that in 2016, as part of the agency providing greater transparency around our role as market steward, we identified something in the way of what we understood our role to be.

This work in developing a market intervention framework is effectively an operating model for helping us understand when we do need to intervene and what the seriousness of the intervention should be. It is a model that will wrap around some of the existing good practice that already occurs at regional level. We have got a couple of instances where we have had some learnings. In the case of short-term accommodation or centre based respite, there were concerns that we would have a market failure situation for that particular class of support, and we adjusted the price. We felt the price was relevant in that case, so we have adjusted the price. I am able to say, too, that we do have instances where providers will indicate that they are withdrawing services. We are always looking to study whether that is a systemic problem or whether it is particular to the individual provider's circumstances. Our regional network is highly adept. It is one of the core capabilities of the regional network in the case of individualised funding to be able to work with the planners and the LAC network to identify alternative providers. We keep a close eye on whether or not they are having issues sourcing alternative providers as a way of determining whether there is a greater problem that we need to be responding to. Perhaps an example from the regional network might help.

Mr Lee : Let's take, for example, the region that I am responsible for in implementing the scheme. Some 75 per cent of my region is rural or remote and very remote. Many of the locations that we will be introducing the scheme in this region don't have an existing market, and that has been the legacy of previous disability systems. It is extremely important, obviously, that the work that Liz described in terms of a national policy framework is around what the triggers are for market intervention and what the extent of that intervention is. They are very important, of course, but in a lot of these places where we are introducing the scheme there is no existing market, so we are yet to test whether a market will or won't stand up in those locations. So it is a little bit early to tell in some locations whether that will happen. In places like Townsville, Mackay or Rockhampton, which are large regional centres and where there were existing markets, you clearly see whether a market is failing or segments of the market are failing, but in locations where there hasn't been a market, we are yet to truly test and determine how those markets respond to us building demand.

CHAIR: In that context, what work is being done in relation to the development of a provider or providers of last resort?

Ms Neville : There are two questions in there. The first one is to Des's point about attracting providers to the market. Des and our other regional managers who are working in thin markets do a lot of locally based work around helping all providers that are potentially in that market to understand the size of the opportunity. So they will provide some local level data around what the size of that demand is. Our market position statements where we have more of an experience in a geographical area provides us with a complete dataset. We often use the experience from those sites to explain to providers in new sites what demand might look like. There are obviously issues with the trustworthiness of the data while we are still in transition and there is a lot of volatility in the data. So we make that very clear to people. Likewise, as I suggested before, we make that information available to all of the potential providers in the market on a basis of transparency. That is our way of trying to attract providers in. It means lots of clever work from our people on the ground in terms of understanding where the assets in a community are, and our regional network is best placed to do that sort of work.

The question to provider of last resort is actually a bit more complex. There has been at least one fairly high profile case in recent times that has brought this issue to bear. We are at the moment working on a project, and we will be reporting to the Disability Reform Council at its next meeting on clarifying exactly what the agency's role is with respect to the so-called provider of last resort. You will find that we are moving away from that language somewhat. We refer to this project as being concerned with how we maintain critical supports for people, so where they might be at risk of relinquishment for various reasons.

That work will help us clarify precisely what the agency's role is, bearing in mind that our role is somewhat different to the states and territories, many of whom have been in the business of delivering disability supports and taking on a natural provider of last resort arrangement. The agency is not in that position, and nor do we intend to be in the business of service delivery, so the model is necessarily different. We agree that it is underdeveloped and that we need to work with the states and territories and to better understand all of the existing programs in each state and territory, because each state and territory has them. These programs are set up specifically to work with people who have multiple and complex needs—so homelessness, justice, early year services, child protection—to make sure that the work that we are doing works with perhaps the relevant caseworker who is involved in those programs and that we have really good protocols for working with those types of programs.

Furthermore, one of the key features of our service model is the role of the support coordinator. We are looking more intensively at whether or not our arrangement for specialist support coordination might need some further intervention to ensure that, for people with very complex needs, we have the right model in place for making sure that specialist support coordinator can move quickly to make sure those supports are not going to be unnecessarily disrupted, or if they need to be stitched in some other way that they are able to move quickly to do that and they understand the issues for the various service systems in this particular cohort of people who really are the most specialised of the hard end.

Senator GALLACHER: Ms Neville, in your opening statement you referred to some statistics, and I took those to be national statistics.

Ms Neville : Yes.

Senator GALLACHER: Can you give us the North Queensland statistics, the area of your responsibility, either now or on notice?

Ms Neville : I have them in my pack but I might take them on notice, because it will probably take me a minute or two to confirm them, unless Des has them.

Senator GALLACHER: Basically, we would just like to see what is happening with participants in North Queensland. I was really interested in your statement about the new providers being sole traders. I think it was a statistic of 42 per cent.

Ms Neville : Yes, that was national. That's correct.

Senator GALLACHER: Is that the same in North Queensland?

Mr Lee : It is fairly comparable.

Senator GALLACHER: Is a sole trader just an individual with an ABN and some services to offer?

Mr Lee : Yes.

Senator GALLACHER: In South Australia there is a Ubercare model, where you can call up someone and get a care worker for whatever price per hour. There is nothing like that developing here?

Mr Lee : There's nothing formalised in terms of a market response in that way, but I believe some informal networks are beginning to move in that direction. I will anticipate that we will begin to see some of that emerge in the market.

Senator GALLACHER: There is something that I am really intrigued by in the rollout of this across the country. If I were a family and we had our life sorted out around work and three kids and one had a package of some sort—it was all sorted out—and along comes the NDIS, could I just choose to remain the way I am or do I have to make decisions about care and management and all that?

Mr Lee : There are some decisions that families will have to make to adapt to the change that the agency brings. There is no doubt about that. But, depending on the person's individual preference or the family's preference, they can choose to manage their plan in a number of different ways. They can be entirely invested in the management and have entire control over the management of how that plan is implemented, or, at the other end of the scale, they can vest the management in the agency, in their affairs—

Senator GALLACHER: Sorry; the agency being?

Mr Lee : The NDIS. A person can opt to have their plan agency-managed. In that regard, there is more of a direct relationship between the provider providing services to that person or family and the payment controls being more directly between the provider and the agency. So it reduces the level of management and decision making that the family would need to be invested in. Then there is an option in between all of that, where the family can opt to have an intermediary assist with some of their financial decisions in terms of implementing their plan.

Senator GALLACHER: Do we have any statistics about where people are going, whether they are choosing no management or the least involvement or intermediate or—I can understand people being keen about the proactive, but it's not for everybody.

Mr Lee : That's correct.

Senator GALLACHER: In some circumstances, where you see the stats of participants having an intellectual disability or autism, there is probably enough going on there anyway, without adding the additional management aspect. Do we have any stats on that?

Ms Neville : Yes, we do. Seven per cent of our participants nationally are fully self-managing. A higher proportion have perhaps one component of their plan being self-managed, but those that are going for the holus-bolus are a smaller group. But that figure has remained steady as we've continued to transition, so that's interesting. I'll pull that figure out in a minute. I also have the Queensland statistics, so I'll leave that with the group. But we have a bigger proportion opting for plan management—that middle option, working with a provider who is making a point of understanding both what the registered provider market and potential unregistered providers may be able to contribute toward a person's plan. In the plan-managing space, we know that participants are particularly interested in seeing greater innovation in respect of community and social activities, so they will sometimes look to an unregistered provider who is perhaps not steeped in the history of disability. Particularly, young people are quite attracted to this, so they will look for a different arrangement for that part of their plan. Some parts of their plan might be quite conservative and in other parts they are prepared to take on a bit more risk.

Senator GALLACHER: Could you give us on notice the break-up in North Queensland?

Ms Neville : Yes.

Senator GALLACHER: I've sort of got this view—it might be erroneous—that you have probably better developed services here than in places in the Northern Territory. I'd be really interested to know if there are any lessons learnt here that could be extrapolated across to the top of Western Australia and the Northern Territory. What do the stats say in Indigenous communities? Do they actively manage? Do they choose a sole model or—

Mr Lee : I can tell you from my personal experience in the communities that we have been working in to date in my area that capacity to self-manage tends to be lower in those locations, and that's more to do with the social dynamic in those places and, in general, system literacy of families and individuals. So we tend to see intermediaries, or plan management, as the predominant model that participants are choosing in those locations—not always, not exclusively, but it is probably more heavily weighted in favour of that in Indigenous communities, from my personal experience.

Senator GALLACHER: So it's possible that you can choose a minimum change model and just look at the specific areas that you think will bring the most benefit and manage those?

Mr Lee : Sure.

Ms Neville : If you are looking for a minimal change situation, which is common for a first plan particularly, which is something we've observed in lessons learnt—people tend to be wanting stability while they are trying to understand the scheme, so they don't necessarily change up their supports in the first year but they may be more inclined to look at that in the second or third year of their plan—effectively you'd probably be looking at an agency managed option, which is the most popular option. You'd be looking to confirm that your existing provider is intending to become a registered provider and to continue the same lines of service, albeit that they are perhaps being unwound somewhat given the way block funding is being unwound. But there are many, many providers from the disability services sector that have made the transition and many participants and their families who continue to work with the provider that they have done so historically.

Senator GALLACHER: So the way plans are developing is mitigating against a market failure situation. If everybody chose to do self-managed the first day, the services wouldn't be there.

Ms Neville : That's correct.

Ms HUSAR: In relation to the specialist housing providers, we know that we've got a massive issue across the country with housing, particularly in rural and regional parts of the country. Aboriginal communities are highly impacted on by that. What are the numbers up here in this area? We know there are about 12,000 people nationally who are waiting in aged-care facilities to be moved out and placed into specialist disability accommodation. What are the provisions for that in this community? What are the numbers looking like? Are there going to be adequate providers in the market or is this going to be an area that we need to flag before moving forward?

Mr Lee : I don't have numbers off the top of my head. About 200 people in aged care have been identified across the North Queensland region. We can give you the exact numbers later. About that number were identified as people with their primary issue being disability related who under the previous disability system moved to aged care early. We are working actively with that cohort. In some instances the level of functional impact of the disability is such that families are in some instances choosing for their family member to remain in aged care because they feel that the deterioration of the disability is such that that is the best location. In other instances we have seen people actively seeking to move back to communities. We have actually seen some cases of that in my region that have already occurred. Yes, supply of adequate, modified housing is an issue in the market. We are starting to see very encouraging interest from developers in the industry in providing specialist disability housing in the market. But, again, it's just where we are in the development continuum. We are having lots of serious conversations with very motivated developers right at the moment. Again, I expect to see some concrete action began to happen across my region from those interactions and liaisons with those developers.

Ms HUSAR: But nothing has started at this date?

Mr Lee : No. Any specialist disability accommodation that is out there now existed in the market prior to the scheme. It's much easier obviously where there is a participant who can live in an unmodified, non-adjusted dwelling. They are the cases that we tend to see moving fairly smoothly and fairly quickly from an aged-care environment into the community.

Ms HUSAR: How many are going back to the community, do you think, with the supports?

Mr Lee : I couldn't say off the top of my head, sorry. We would have to dig into our statistics to give you an idea of that.

Ms HUSAR: Do you think it is a significant proportion or do you think it is more the exception and not the role?

Mr Lee : I think it's small numbers from my knowledge of the movement. Again, that is a little bit related to human nature as well and being cautious about making significant changes.

Ms HUSAR: For those developers that you are in conversation with, are there any specific barriers that are preventing them at this stage? I know from speaking to other people in other areas that the way payments are set up means there is uncertainty around what we're doing with that moving forward. What are the barriers for those developers?

Ms Neville : We have a commitment to work with DSS. There have definitely been concerns raised around not necessarily the price for SDA but the certainty around how long those prices will remain in place. I think the fact that we signalled early on that there would be a price review for SDA has also inadvertently sent a signal to the sector that perhaps they should be concerned. So we are working with DSS to address some of those concerns around certainty through this price review process and also to give additional information to the market about, for instance, the sorts of dwellings where we think we have particular gaps in the market. There is obviously a tiered structure and a number of different types of dwellings that could be built. I think there is a piece of work for us in being able to share the incomplete information that we have on demand to date but also to be able to share some of our assumptions about what sorts of dwellings we think will be required. We also expect that as an outcome of the price review there will be greater certainty for investors in understanding what the time horizon for the next review will be.

Ms HUSAR: Do you know when the review is due?

Ms Neville : DSS is submitting draft terms of reference to the DRC that's meeting in April. On one of your other questions about the numbers nationally—I admit we will have to come back to you with the specifics around North Queensland—we had just over 6,900 participants with SDA in their approved plan as at 31 December. That was an increase on the previous quarter by about 850. Then we have a number of new builds enrolled as SDA currently sitting at 139. I think that the concerns that are being raised are from people trying to anticipate the pipeline rather than us necessarily seeing great gaps emerging right now. That is how I would characterise it.

Ms HUSAR: Do you think this is quite a high priority that we need to get right to ensure that we have got developers able to start investing in that way?

Ms Neville : Yes. I would say that, absolutely. It's something that was spotlighted by the CEO in the recent Senate estimates. It's a piece of work that our division is actively working on now.

CHAIR: Thank you, Ms Neville and Mr Lee, for coming along this morning and sharing in this discussion with us. If you could forward that movement information to the secretariat, we would appreciate that.

Ms Neville : Certainly.

Pr oceedings suspended from 10:24 to 10 : 40