Governance. Funding the NDIS

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2 About CCI The Chamber of Commerce and Industry of Western Australia (CCI) was founded on the belief that the existence of a diverse and thriving business community is an essential ingredient to building a vibrant and prosperous society. For more than 120 years we have advocated on behalf of the Western Australian business community and in doing so we have proudly built a strong membership base representing businesses of all sizes in all parts of the economy. CCI remains dedicated to the pursuit of a competitive and responsible free enterprise economy for the benefit of all individuals in society. This paper has been shaped from the views of a number of CCI s Members in the disability sector, including some who operate in the current National Disability Insurance Scheme (NDIS) trial sites in WA. The recommendations outlined in this report are designed to ensure that all Western Australians with, or who may acquire, disability can access high quality care and support under the NDIS reforms, while ensuring a strong and viable WA disability services sector into the future. Contents Executive Summary... 1 Introduction... 5 Governance Funding the NDIS Other Areas of Reform Pricing Arrangements Funding Arrangements Structural and Organisational Changes Information Available to Participants Undeveloped Markets Disability Sector Workforce End Notes... 36

3 Executive Summary In 2011, a National Disability Insurance Scheme (NDIS) was identified by the Productivity Commission as the best way to deliver the required social safety net for people with significant and enduring disability in Australia. The previous Commonwealth Government accepted the findings of the Productivity Commission and committed to introduce the NDIS in 2013 through the progressive rollout of NDIS trial sites across Australia. The final year for full rollout of the NDIS across most Australian jurisdictions is scheduled for The primary change intended under the NDIS reforms is the implementation of a self- directed funding model in all Australian jurisdictions. This will place disability funding directly into the hands of people with disability, maximising their opportunities for independence and for full participation in the community. In addition to improving the wellbeing of participants by allowing them to make choices and consume services that they truly value, a self- directed funding model will also change the operating environment for many disability service providers by increasing competition and creating new business opportunities in the market for disability services. Prior to the commencement of the NDIS trial across Australia, the WA Government raised concerns that Western Australians with disability may not be better off under a national model of governance for implementing the NDIS reforms in WA. These concerns arose because: many of the key reforms embodied in the NDIS are not new or innovative to WA; the WA Government already has a strong track record of achieving better outcomes for people with disability when compared to other Australian jurisdictions; and the positive outcomes that Western Australians with disability have been able to achieve are underpinned by the strong partnership between the WA Disability Services Commission (DSC), WA not- for- profit sector, and other WA Government agencies that provide mainstream disability services. However, it was acknowledged that the additional funding proposed under the NDIS would expand and further develop the WA disability system, increasing the capacity of the system to meet unmet demand. As a result of the WA Government s concerns, an agreement was reached in 2013 between the WA and Commonwealth Governments to trial the implementation of the NDIS reforms in WA under two different governance models, the National Disability Insurance Agency (NDIA) national governance model and the WA DSC state implemented and administered disability care and support model, My Way. The trials began on 1 July 2014 and will run over a two year period, after which they are subject to an evaluation by an independent WA Joint Steering Committee. Without pre- empting the outcomes of the trial process, CCI considers that a federated model where DSC administers the implementation of the NDIS reforms in WA will deliver the most beneficial outcomes for Western Australian s with disability and the WA disability services sector. This recommendation is based on consultations with CCI s members in the disability sector and the evidence currently available from the trial sites. 1

4 Governance The right governance model for WA is critical to ensuring that the full range of benefits from the NDIS reforms are realised for all Western Australians and that the cost to the taxpayer is minimised. By ensuring that decision making occurs at a local level through state specific operational guidelines, a federated model allows decisions to more accurately reflect varying local circumstances and capacities of participants and service providers in WA. A federated model for reform would also preserve incentives for the WA Government to continue to explore innovative approaches to address local challenges, which would enhance the efficiency and cost effectiveness of the NDIS. In addition, the development of essential close relationships between key decisions makers and specialist and mainstream service providers is more likely to occur under a federated model, given WA s unique Delivering Community Services in Partnership Policy (DCSP Policy) and DSC s longstanding relationships with existing community service providers and other State Government agencies that provide mainstream disability services. It is also likely that a federated model, with reduced NDIA representation and bureaucracy in WA, will deliver more efficient and cost effective outcomes for participants on the ground from much of the key infrastructure and resources needed to implement the NDIS reforms already being embedded in the WA system. If a new, national model was implemented in WA, a number of structures and processes could be unnecessarily duplicated or replaced. Notwithstanding, the administrative efficiency of either model will be somewhat reliant on the implementation of necessary, modern business systems and processes. To reduce the risk of inconsistency across jurisdictions in regards to portability and entitlement, the NDIS reforms should be enacted by WA legislation. The WA Government should review the Disability Services Act 1993 (WA) (the DS Act) to include arrangements specified in the National Disability Insurance Scheme Act 2013 (Cth) (the NDIS Act), particularly in relation to: access criteria determination for participants; principles relating to plans; the meaning and assessment of reasonable and necessary supports; compensation payments; and provisions for participants nominees. Funding the NDIS The NDIS reforms come at a substantial cost, with the Australian Government Actuary estimating that in the final year of full rollout, the gross cost of the scheme will total approximately $22 billion. At a time when both the Commonwealth and State and Territory Governments are faced with significant fiscal challenges, all levels of government will need to look at budgetary efficiencies and other reform measures to ensure that sufficient funding is available to implement the NDIS reforms. Over the longer term, the financial sustainability of the NDIS will require that implementation follows best practice insurance principles, as well as the successful application of evidence- based early intervention practices. The implementation of best practice insurance principles includes the development of an actuarial framework to monitor financial performance, potential financial risks and trends against forecast for clearly defined outcomes. Doing this will reduce the risk that in the 2

5 longer term, the expected liabilities of the scheme exceed the funding stream available to implement it. Assuming that a federated model is implemented in WA, there is a possibility that the WA Government, rather than the Commonwealth Government, will carry the full financial risk associated with higher than projected population numbers or higher per person funded support costs. If this was to occur, it would be essential that any financial sustainability or performance monitoring frameworks adopted by the NDIA are also adopted by DSC, incorporated into a National Partnership Agreement (NPA) between the Commonwealth and WA Governments and implemented in the DS Act to ensure the long run sustainability of the scheme. Having uniform reporting requirements in WA will also ensure that data is consistent across jurisdictions, which is critical to tracking the progress of a federated model and to addressing issues with the scheme as they arise. Other Areas of Reform Even in WA where individualised services have existed for some time, the substantial increase in the amount of funding available under the NDIS combined with an enhanced focus on self- directed funding will stimulate a more competitive, market- based environment. This type of environment will create many challenges and opportunities for the disability services sector as it transitions. A prerequisite for the success of the NDIS is that there must be clear lines of responsibility between the scheme and the mainstream services that connect with it. Ultimately, the implementation of the NDIS should not be expected to meet the needs of people with a disability that are currently met by other service systems. Accordingly, it is anticipated that the NDIS will present many opportunities for private providers in the disability services sector. To ensure these opportunities can be met, it is important that transitional arrangements are put in place to minimise the risk of the capacity or capability of the WA disability services sector diminishing and resulting in a loss of service to some Western Australians with disability. CCI has identified the following areas of reform where there is a role for government to assist both disability sector organisations and/or people with disability in transitioning to the NDIS. Pricing A fully flexible, deregulated price model in which prices can freely adjust to changes in the level of demand will enable participants to exercise control and choice in terms of quantity and quality and give providers an incentive to innovate and provide unique services. Funding Arrangements Under the NDIA model of reform, public funding to disability service providers will be made in- arrears of service delivery, which will require an additional focus by providers on managing cash flow and bad debts at the expense of service provision. To minimise disruption to the sector, funding should be provided in advance of service delivery, as occurs in the My Way model. Structural and Organisational Changes To assist with the transition, the WA Government should deliver further information and education to service providers about the changing operating environment and the impact on the sector. 3

6 Information Available to Participants The WA Government should provide information to people with disability about the NDIS reforms, the rights of people with disability under the NDIS and the opportunities the NDIS will create for them to access the services they need. Undeveloped Markets Where undeveloped markets that cannot support highly competitive arrangements exist in WA (some rural and remote areas, for example), block funding arrangements should be maintained to mitigate the risk of services being withdrawn from the market. The WA Government should aim to progress these undeveloped markets so that in time, they become more competitive and can support individualised funding arrangements. Disability Sector Workforce - To help alleviate and meet workforce demand in the disability sector in the future, the WA and Commonwealth Governments should undertake the workforce strategies recommended by the Productivity Commission, such as marketing the positive contribution that disability support workers make and providing subsidies for the training of disability support workers. In addition, CCI considers that the industrial relations framework should be reformed to provide employers and employees in the disability services sector the opportunity to establish terms and conditions of employment that facilitate the delivery of individualised services to participants. 4

7 Introduction In 2011, the Productivity Commission recommended a National Disability Insurance Scheme (NDIS) in Australia as the best way to deliver the required social safety net for people with significant and enduring disability through the provision of high quality, individualised care and support. 1 In the majority of Australian jurisdictions, disability care and support has historically been provided through block funding arrangements, where governments directed funding to service providers through lump sum payments and in turn, service providers would use this funding to deliver disability care and support. However, this funding approach meant that people with disability had little choice over the types of services they received and who they received them from, as they could only obtain narrowly prescribed services from providers that have pre- existing contractual block funding arrangements with government. While the majority of disability care and support around Australia was provided through block funding provisions, due to each state or territory having their own budget restrictions, disability systems across jurisdictions were often inequitable and fragmented. The main aspects that varied across individual state or territory disability systems were generally in relation to: eligibility criteria; assessment tools and procedures; conditions of service provision; and the suite of services, aids and appliances on offer. 2 These localised arrangements created uncertainty in regards to the portability of services and funding across state and territory borders. In many instances under previous arrangements, if a person with disability that received services in one jurisdiction moved interstate, they would lose access to services altogether and have to reapply to receive funding and support services in their new area of residence. In addition, many State and Territory Governments previously offered varying disability support programs within their own jurisdictions, which created even more uncertainty for users in terms of realising the extent and types of supports available to them. In essence, the various disability systems that previously existed within Australia created an inequitable postcode lottery where the types and levels of support that people with disability received depended upon where they lived rather than their support needs. 3 The majority of previous disability care and support offered around Australia was also not sufficient to meet full demand. Analysis undertaken by the Productivity Commission showed that to reduce levels of unmet need and to provide disability care and support that is reasonable and necessary, collective state and territory budget disability spending would need to increase, as a proportion of total budget spending, from three per cent to six per cent. 4 In 2009 terms, this represents an increase in public expenditure of $6.5 billion per annum. Chart 1 shows the previous levels of unmet need in Australian for various types of disability supports. 5

8 The Productivity Commission also found that disability spending across all Australian jurisdictions (barring NSW) was more volatile than health spending between the and financial years, which in turn created uncertainty for service users about their future levels of support. The calculation of volatility was based on the variation of annual growth in state and territory disability spending per potential service user. 5 In addition, many of the previous disability support programs delivered around Australia were pilot programs with undefined prospects and as a result, provided more uncertain outcomes for participants. To address these concerns, the Productivity Commission recommended a social insurance model, embedded with individualised funding principles, as the most effective and beneficial model for providing disability care and support to the Australian population (See Box 1). Box 1: Why a social insurance model is preferred The Productivity Commission reasoned that when considering the low risk nature of acquiring a disability, the large financial costs involved and that people often have little control over whether or not they sustain a disability, disability care and support should be considered a critical form of government expenditure like Medicare. Further, it should have the same certainty, through insurance principles, of future funding for all Australians regardless of where they live. A social insurance model will safeguard against uncertain outcomes by providing all Australians with confidence over future funding in the event they acquire significant and enduring disability. Further, as all Australians are given insurance, it also provides certainty that if a participant was to cross jurisdictional borders, they would not lose access to their current, or future, level of disability care and support. The total monetary value of certainty cannot be quantified, but is best demonstrated by the 6

9 common occurrence of individuals paying money to acquire it. For example, people will purchase travel insurance, pay a premium to lock in a fixed interest rate on their home loan and purchase extended warranties on everyday household items. The large value individuals place on having certainty is a significant reason why there is a considerable role for government to provide a social safety net for all of its citizens in the instance they are disadvantaged by disability. However, in considering this, it is noted that a private insurance model, as opposed to one where the Commonwealth Government pools the costs of lifetime care and support across all Australians, would result in less efficient and equitable outcomes for all Australians. If a private insurance model was used, the costs associated with purchasing insurance would be deemed too excessive, especially for those who are low risk and would result in many individuals not receiving full coverage and certainty of support. This would create a situation of adverse selection, where the only people who purchased insurance are those of high risk that have a higher probability of making a claim. Further, it is conceivable that even those who are high risk would find it difficult to afford insurance cover, as a high risk of disability is generally associated with lower socioeconomic groups that have lower than average incomes. In addition, private insurance cover would not be sufficient for severe, costly disabilities. An example of this was cited by the Productivity Commission, where an insurance company offers $50,000 to a family if their child is born with a congenital abnormality. A lump sum amount of this magnitude is very modest when compared to the potential costs associated with lifetime care and support. 6 The previous Commonwealth Government accepted the findings of the Productivity Commission and committed to introduce the NDIS. The introduction commenced in 2013 through the progressive rollout of NDIS trial sites across Australia. The final year for full rollout of the NDIS across most Australian jurisdictions is scheduled for The NDIS reforms will see the use of a self- directed funding model, which addresses many of the concerns relating to self- determination by placing disability funding directly into the hands of people with disability, maximising their opportunities for independence and for full participation in the community. This model will ensure that funding is used by people with disability to meet their own unique goals and aspirations, which will in turn increase their wellbeing through their increased capacity to make choices and consume services that they truly value. The key principle underpinning wellbeing improvements through self- directed funding is that individuals are best placed to know the intricate details of their own unique preferences and should therefore be the ones who ultimately make decisions regarding their consumption of services. There is also the principle that individuals value the capacity to make choices, even when the choices they make are the same as those an outside representative would make for them. This principle stems from the view that being self- determined and having control over one s life is an important aspect of wellbeing. Self- directed funding will also increase competition and provide exciting new business opportunities in the disability services sector. Unlike block funding provisions which create incentives for providers to please the government, providers operating in a self- directed funding model have greater impetus to innovate and differentiate their products to satisfy the individual needs of consumers and capture higher levels of market share. Under the scheme, there would be a substantial increase in public funding for disability care and support. This reflects the consideration that prior to the NDIS reforms, disability care and support in the majority of Australia was not sufficient to meet full demand, which was apparent in the amount of unmet need for disability care and support. 7

10 Recent estimates made by the NDIA suggest after full national rollout of the NDIS in , the total cost of running the scheme will be in the order of $22 billion 7, with funding to be shared between the Commonwealth and State and Territory Governments. To ensure stability in the Commonwealth s share of funding for the NDIS, the Commonwealth Government increased the Medicare Levy by half a percentage point from 1.5 per cent of taxable income to two per cent effective from 1 July While the costs of the NDIS are substantial, the economic benefits associated with maximising the opportunities for people with disability to participate in the community and contribute both productively and socially are also significant and estimated at an additional $32 billion added to GDP by 2050; largely stemming from employment growth of 320,000. In addition, the Productivity Commission estimated that the NDIS could also result in Disability Support Pension savings equal to a $2.7 billion constant price annuity over 90 years. Disability care and support in WA While people with disability in WA will benefit considerably from the increase in funding for disability care and support under the NDIS, it is important the new approach to disability reform delivers improved outcomes for Western Australians with disability. Prior to the commencement of the NDIS trial sites across Australia, the WA Government raised concerns that Western Australians with disability may not be better off under a national model of governance for implementing the NDIS reforms in WA. These concerns arose because: many of the key reforms embodied in the NDIS are not new or innovative to WA; the WA Government already has a strong track record of achieving better outcomes for people with disability when compared to other Australian jurisdictions; and the positive outcomes that Western Australians with disability have been able to achieve are underpinned by the strong partnership between the WA Disability Services Commission (DSC), WA not- for- profit sector and other WA Government agencies that provide mainstream disability services. WA has long been seen as a leader in the provision of frontline disability services. Over many years, successive WA Governments, in strong partnership with the WA not- for- profit sector, have demonstrated a commitment to high quality care and support for Western Australians with disability. Historical data on disability expenditure by State and Territory Governments shows, per potential recipient prior to the NDIS, WA Government funding to Western Australians with disability has generally been higher when compared to the average funding provided per potential recipient in other Australian jurisdictions. 9 In addition, the individualised funding and relationship- based principles identified by the Productivity Commission as a best practice approach to disability services provision have also been a part of the WA system for some time now. These have historically delivered better individual outcomes for people with disability in WA. As can be seen in Chart 2, the WA employment to population rate of people with disability aged between 15 and 64 years was the highest of all Australian states in 2009 and 2012 at 57.7 per cent and 52.8 per cent, respectively; and considerably higher than the national average in both of these years (50 per cent and 47.7 per cent, respectively). 10 Whilst a difference of a few percentage points can be considered marginal, for a state such as NSW where the employment to population rate of people with disability was 45.9 per cent in 2012, if it were to catch up to the WA figure reported in the same year, an extra 48,111 people with disability would have been employed in NSW in

11 As well as achieving better employment outcomes, Chart 3 shows that Western Australians with disability generally report higher social inclusion levels. In 2012, some 78.2 per cent of Western Australians aged between 15 and 64 years with a severe or profound disability reported that they had face to face contact with ex- household family or friends in the last week, while the national average during the same period of time was much lower at 70.6 per cent. 11 Further, Chart 4 shows that the proportion of Western Australians with disability in 2012, aged between five and 64 years who reported that the main reason for not leaving home as often as they would like is their disability or condition, was also much lower than the national average (10.1 per 9

12 cent versus 14.7 per cent, respectively). 12 This suggests that a higher proportion of Western Australians with disability, when compared to other jurisdictions, do not see their condition as disabling and as a result, continue to lead fulfilling lives. A study conducted by Fisher et al. in 2010 further demonstrates the positive outcomes of various individualised funding programs and trials around Australia. The study, which utilised interviews and questionnaires with people with disability and their families, found that 71.4 per cent of respondents reported they were either better off or much better off under individualised funding when compared to their previous funding arrangements, with none reportedly worse off. In addition, some 92.4 per cent of respondents reported that under individualised services, they were able to exercise choice over the types of supports they consume and 81.2 per cent of respondents reported they were either happy, or very happy under individualised services. 13 The WA Government s experience in delivering individualised disability care and support dates back to 1988 when it pioneered the Local Area Coordination (LAC) program that provided people with disability with individualised, responsive and flexible supports linked to local resources and support networks. This experience and expertise has been recognised internationally, with the Ontario Round Table on Individualized Funding, whose main purpose was to develop a policy framework and implementation strategy for individualised funding in Ontario, stating in 2000 that [WA] has the simplest yet highly developed approaches to individualized planning and direct funding. 14 In addition, after making the case that individualised funding was a best practice approach to providing disability care and support, the Productivity Commission found that Western Australia has the most developed and long- standing arrangements for some kind of self- directed support in Australia Most funding allocated to people with disability is based on individual assessment, allows portability of funding between service providers and provides the capacity for client- directed customisation of services Block funding is rarely used to fund service providers [in WA]

13 The positive outcomes Western Australians with disability have been able to achieve are further underpinned by the strong focus of the WA Government to engage and collaborate with the WA not- for- profit sector for the delivery of disability services throughout the state. The benefits of delivering disability services through not- for- profit service providers are outlined in Box 2. Box 2: Benefits of service delivery by the not- for- profit sector There are substantial benefits to service delivery by the not- for- profit sector. In particular, not- for- profit service providers: can often access resources that are not available to government such as volunteers and private sponsorship; often have a long association and close relationship with a specific target group in a community and can be better engaged. This strengthens their capacity to deliver services to that group more efficiently and effectively than government service providers; are more adaptable and capable of delivering a flexible package of individualised support and services compared to government service providers, which are often bound by legislative rules and bureaucracy; are more mission driven than government service providers and as a result have the capacity to generate significant amounts of social capital in a community; and experience the relative stability provided by a five year Service Agreement. The benefits of delivering disability services through not- for- profit service providers have long been recognised by the WA Government. In , 71.5 per cent of DSC funds were allocated to non- government organisations. 16 The strong partnership between the WA Government and WA not- for- profit sector is built from the WA Funding and Purchasing Community Services Policy, which was implemented in This has been further strengthened with the implementation of the Delivering Community Services in Partnership Policy (DCSP Policy) in The current DCSP Policy seeks to improve outcomes for all Western Australians by building a genuine partnership between the public and not- for- profit community sectors in the policy, planning and delivery of Community Services in Western Australia. 17 It does this through a set of partnership principles and behaviours that focus on: delivering demonstrated improvements in social, cultural and economic outcomes for the WA community; building a partnership between the WA Government and WA not- for- profit sector centred on trust, respect and transparency; actively involving not- for- profit organisations in decision making processes; recognising the valuable contribution of both the WA Government and WA not- for- profit sector in designing and delivering community services; ensuring the sustainability of community services into the future; and empowering and engaging service users in the planning, delivery and design of community services

14 In 2012, based on the principles and behaviours identified in the DCSP Policy and experience with the LAC program, the WA Government implemented its own disability system for WA residents, known formally as WA NDIS My Way (My Way). In consultation with more than 1,300 people including those with disability, their families and carers and the wider disability sector; My Way embeds the individualised, relationship- based approach to disability care and support that is unique to the LAC program, while enhancing and further promoting the capacity and opportunities for people with disability to manage their own funding, which had been underutilised in the LAC program. 19 In the rollout of the NDIS, the Commonwealth Government has followed a national model for reform where operational decisions relating to NDIS funding are centrally determined by the National Disability Insurance Agency (NDIA), which has statutory independence under Commonwealth legislation. In contrast, a federated model would allow the Commonwealth Government to provide additional NDIS funding to State and Territory Governments to manage and administer their own disability systems under nationally consistent guidelines. This would still enable operational decisions to be made at a local level. The Commonwealth Government s preference for a national model of reform is likely to reflect concerns articulated by the Productivity Commission that under a federated model there is a risk disability care and support would, over time, become fragmented, inequitable and subject to a postcode lottery both within and between jurisdictions with agreements breaking down into disputes about who is to pay, how much and for what 20 Despite this, the WA Government raised concerns that a national governance model in WA (as opposed to a federated governance model) would deliver poorer outcomes for Western Australians with disability. 21 In particular, the primary concerns were that under a national model of governance, many decisions would no longer reflect local circumstances, innovation would be stifled across jurisdictions and the high levels of community and cross government engagement built over years of service delivery by DSC would be lost. As a result of these concerns, an agreement was reached between the WA and Commonwealth Governments in 2013 to trial the NDIA model against My Way, in WA, over a two year period beginning on 1 July These trials are subject to an evaluation by an independent WA Joint Steering Committee that includes senior officials in the State Government (from the Department of Premier and Cabinet, DSC and Mental Health Commission) and the Commonwealth Government (from the Department of Prime Minister and Cabinet, Department of Social Services and NDIA). 23 The current state of disability reform The NDIA and My Way trials (for key elements and statistics of both trials see Box 3) provides a unique opportunity for both the Commonwealth and WA Governments to test the implementation of the NDIS reforms under a national and federated model and to consider the implications of both. The right governance model for WA is critical to ensuring the full range of benefits from the NDIS reforms are realised for all Western Australians and that the cost to the taxpayer is minimised. In particular, the right governance structure will ensure that for any additional public funding, the NDIS reforms will deliver better opportunities for all Western Australians by unlocking the full potential of people with significant and enduring disability to contribute productively and socially in their local communities. 12

15 Box 3: Key elements of the NDIA Perth Hills and DSC Lower South West trial sites 24 a: Includes approved plans that are both funded and with no funding requested b: Average plan cost of approved plans that have funded supports that are costed c: This is the collective operating expense ratio of all NDIA trial sites The NDIA trial in the Perth Hills follows a national model The Perth Hills NDIA trial began on 1 July In this trial site, the NDIS has been implemented by the NDIA under the National Disability Insurance Scheme Act 2013 (Cth) (the NDIS Act) using national operational guidelines. The NDIA head office is located in Victoria and the WA regional office is located in Midland. Under the NDIS Act, the Chief Executive Officer (CEO) of the NDIA has a statutory responsibility for operational decisions relating to access, planning, information requirements, registered providers, nominees, compensation and debt collection. Under the Act, the CEO has the capacity to delegate any, or all, of his decision making powers to NDIA planning officers in the regional office. Any officer with delegated powers has a legal responsibility to comply with any directions of the CEO. In the NDIA trial sites across Australia, access and planning decisions have been delegated to NDIA officers, known as specialist planners, who must act in accordance with national operational guidelines. Depending on cost and complexity, some decisions and assessments must be referred to the WA NDIA Branch Manager. In most NDIA trial sites, once a plan has been approved by the NDIA specialist planner, the participant is connected with a Local Area Coordinator (LAC). The LAC then has responsibility to assist the participant to link their planning supports to local community services and disability service providers and to ensure that their supports are coordinated. 25 Across different trial sites in Australia, the NDIA is exploring a number of operating models for LACs that include direct employment by the NDIA and contracting and outsourcing arrangements to the 13

16 private sector. In the Perth Hills trial site, the NDIA is also exploring the benefits of combining the specialist planner and LAC roles as a best practice approach. 26 The My Way trials in the Lower South West and Cockburn and Kwinana regions follow a federated model The Lower South West My Way trial began on 1 July 2014, while the Cockburn and Kwinana region My Way trial began on 1 July In these trial sites, My Way has been implemented by DSC in accordance with Part 4B of the Disability Services Act 1993 (WA) (the DS Act), using state specific operational guidelines. The DSC is a WA State Government agency established under the DS Act to provide disability services and support directly and to fund non- government disability service providers. Under Part 4B of the DS Act, responsibility for operational decisions that are conferred to the CEO of the NDIA in relation to access and planning under the NDIS Act are transferred to DSC. However, these must be consistent with requirements in the NDIS Act. In the My Way model, access and planning decisions have been delegated to DSC officers, known as My Way Coordinators, who must act in accordance with state- specific guidelines established by DSC. Depending on cost and complexity, some assessments must be referred to the Office of the Director General at DSC. My Way Coordinators also have a direct responsibility for on- going assistance to participants to link their planning supports to local community services and disability service providers; and to collaborate with other State Government agencies that have responsibilities to provide disability services to ensure that all supports are coordinated

17 Governance There are costs and benefits to both a national and federated model for implementing the NDIS reforms. However, CCI considers the benefits of a federated model where DSC administers the implementation of the NDIS reforms in WA outweigh the minor residual risks or costs accompanied with doing so. Capacity for decisions to reflect local circumstances Across Australia, the goals and aspirations of people with significant and enduring disability, their local communities and the capacities of local service providers will vary substantially and reflect a diverse range of economic, social, geographic and environmental factors. Under a national model, all decision makers must act in accordance with national operating guidelines established by the CEO of the NDIA. While national operating guidelines for decision makers are more likely to ensure uniform outcomes for people with disability regardless of their jurisdiction, there is a risk that they will restrict the ability of decision makers to make assessments that accurately reflect local circumstances, challenges and capacities. The principle of subsidiarity outlined in CCI s Federalism in Australia: A Discussion Paper suggests that political authority should be exercised by those agencies closest to the citizens affected by their decisions. 28 In the case of disability services provision in WA, this can be considered as the lowest competent authority that is able to effectively implement and administer the NDIS reforms. If there had been a demonstrated case of market failure in the previous provision of disability services in WA, then it would be understandable if DSC was not deemed the appropriate authority to implement the NDIS reforms effectively. However, given DSC s strong track record of being at the forefront of innovation in the delivery of individualised services to people with disability in WA and its long history of achieving better outcomes for people with disability in WA when compared to other Australian jurisdictions, CCI considers that there has not been a demonstrated case of market failure in the provision of disability services in WA. As a result, the responsibility for implementing the NDIS reforms in WA should remain with DSC under a federated model. One of the chief considerations of the subsidiarity principle is that State and Territory Governments are better placed than the Commonwealth Government to understand the local circumstances of people with significant and enduring disability in their jurisdiction. This enables them to identify the most efficient and cost effective mechanism for delivering supports based on local knowledge of the capacities of both mainstream and specialist disability service providers. CCI notes this was also the view expressed to the Productivity Commission in 2011 by numerous WA disability service providers through submissions to its Inquiry into Disability Care and Support. For example, the submission by the Autism Association of WA stated: The Autism Association of Western Australia has concerns regarding the establishment of any new system that bypasses State responsibility and the achievements of States such as Western Australia. In our view, the further people with disabilities are from those who ultimately make decisions about matters that impact on their lives, the more likely they are to be disempowered and disadvantaged

18 While the submission by the Centre for Cerebral Palsy (WA) stated: State disability authorities have a good understanding of local features, characteristics and factors and have organisational structures that suit the needs of local circumstances. Western Australia has a very effective and inclusive approach to the development and provision of disability services. 30 Incentives for innovation and continuous improvement A federated model for reform would preserve incentives for the WA Government to continue to explore innovative approaches to address local challenges, which would enhance the efficiency and cost effectiveness of the NDIS. By ensuring decision making occurs at a local level, a federated model will also allow the State and Territory Governments to respond innovatively to local challenges within their own jurisdictions. This approach allows each jurisdiction to learn from experience in other states and territories and is expected to lead to the adoption of best practice which will deliver beneficial outcomes across Australia. As stated in CCI s Federalism in Australia: A Discussion Paper, Diversity encourages experimentation and provides examples against which to judge experiments The best examples are imitated by others. Equally important, the worst examples are avoided. 31 The capacity and freedom for the WA Government to respond innovatively to local challenges in the past has led to disability reforms that have been internationally recognised as best practice. Indeed, many of the reforms pioneered in WA are cornerstones of the NDIS, including an individualised, self- directed approach to providing responsive and flexible supports to people with disability and a greater reliance on the not- for- profit sector for the delivery of those supports. There is already evidence that, through the My Way trial, innovative approaches that are now established features in My Way have influenced the direction of disability reform at a national level. For example, the benefits of using My Way Coordinators as a single, continuous point of contact for participants in the NDIS has been recognised in the NDIA s first annual report, which states that Operating models at the Agency s three new trial sites Barkly in the Northern Territory, Australian Capital Territory and Perth Hills in Western Australia will trial combining planner and LAC roles to achieve continuity of relationships and streamlined processes so that people have less or more support during the planning process according to their needs. The My Way site in Western Australia will also serve as another means of testing operating models, ensuring the NDIS ultimately adopts the best model. 32 Community engagement and access to mainstream services The development of close relationships between key decisions makers and specialist and mainstream service providers in WA is more likely to occur under a federated model, given WA s unique DCSP Policy and DSC s longstanding relationships with existing community service providers and other State Government agencies that provide mainstream disability services. The Productivity Commission recognised the importance of a strong partnership between the NDIS and mainstream service providers by indicating that a key policy goal of the scheme should be to connect participants with mainstream services (both public and private) where possible. A strong interaction between the NDIS and mainstream service providers will increase participants community involvement and independence by reducing their reliance on isolated specialist disability services. A greater focus on providing informal supports will also enhance the efficiency and long run sustainability of the scheme

19 The importance to the long run sustainability of the scheme of establishing these relationships has also been recognised by the Chairman of the NDIA Board. In the NDIA s first annual report, the Chairman s message noted a key feature of the NDIS is that in addition to formal supports, the scheme enables people with disability to achieve their goals by providing access to community and mainstream services the NDIS is as much about community engagement and improved access to mainstream services, as it is about the provision of funded supports 34 The interaction between the NDIS and other mainstream service providers, such as the Department of Health and the Department of Housing, will be extremely complex and will be surrounded by uncertainty regarding the boundaries of service delivery between specialist and mainstream disability service providers. CCI considers that DSC, rather than a new national agency such as the NDIA, would be best placed to manage this interaction. A new national agency such as the NDIA is less likely to establish the same close relationships that DSC has with other State Government agencies and is less likely to have the same inbuilt understanding that DSC has of these mainstream service providers. In addition, a national governance model could also lead to a loss of engagement with specialist disability service providers. Consultations with CCI members that have operations in both the Perth Hills NDIA and Lower South West My Way trial sites have already raised these concerns. As an indication, Box 4 provides two case studies of the planning processes and outcomes for two adolescent males with similar goals but residing in different trial sites. Prior to implementation of the NDIS, both adolescents received disability funding for supports that were provided to them by the same disability service provider. The different experiences in negotiating plans with NDIA specialist planners and My Way Coordinators provides an example of the importance of strong engagement and close relationships with disability service providers in achieving positive outcomes for people with significant and enduring disability. Box 4: Case studies The importance of community engagement Case Study One RJ, Perth Hills, NDIA Trial Site RJ is a young adolescent male in the Perth Hills region. Prior to implementation of the NDIS by the NDIA in the Perth Hills, RJ had access to respite (or short- term accommodation support) with Activ Foundation. After implementation, RJ wanted to continue with the same level and quality of respite. After gaining access to the NDIS, RJ and his family met with a NDIA specialist planner and access to respite was defined as one of RJ s goals in his initial plan. However, the level of respite that RJ had accessed prior to the NDIA trial was not fully explained to the NDIA planner. As a result, a realistic allocation of funding for similar respite was not included as part of his plan. After his initial planning session, RJ had only $2,000 allocated as a fixed support for respite and $8,000 as a flexible support but allocated to psychology services. Activ Foundation had a previous relationship with RJ as his primary service provider, including for respite. When RJ and his family contacted Activ Foundation to inform them about the funding allocation for supports determined in the initial planning session, Activ Foundation recommended that RJ and his family make another appointment with the NDIA planner to review the plan and allocate additional funding for respite. However, it took RJ and his family two months to obtain another appointment with the NDIA planner to review and amend his plan. After this appointment, the NDIA planner allocated $12,000 to RJ for respite services. 17

20 Through the planning process, despite knowledge that Activ Foundation was a previous service provider, the NDIA specialist planner did not liaise with Activ Foundation. RJ and his family consider that access to services and outcomes for RJ could have been improved if the NDIA had been more willing to talk to, and engage with, Activ Foundation during the planning process. With better engagement with Activ Foundation, it is likely the appropriate allocation of respite funding would have been allocated to RJ in his original plan leading to lower levels of uncertainty and frustration for RJ and his family throughout the process. Case Study Two HD, Lower South West, My Way Trial Site HD is a young adolescent male in the Lower- South West region. Prior to implementation of My Way by DSC in the Lower South West region, HD had access to respite with Activ Foundation. After implementation, HD wanted to continue with the same level and quality of respite. After gaining access to My Way, HD and his family met with a My Way Coordinator and access to respite was defined as one of HD s goals in his initial plan. After the planning session was complete, the My Way Coordinator contacted and engaged (with the participant s and family s permission) with Activ Foundation to confirm that HD was an existing customer. In addition, the My Way Coordinator actively consulted with Activ Foundation to determine if the respite allocation in the plan was appropriate to maintain HD s level of respite services prior to the implementation of the Lower South West My Way trial. Through HD s My Way Coordinator, Activ Foundation requested a copy of HD s plan and HD decided not to share his plan. Activ Foundation willingly accepted this decision due to the occasional nature of the service. Activ Foundation considers that access to the plans developed by My Way Coordinators, with the permission and in consultation with the My Way participant, to be essential for better outcomes. Although Activ Foundation would have received a copy of the funding sheet prepared by the My Way Coordinator that outlined the funding strategy for HD, Activ Foundation has indicated that it is not always possible to accurately infer desired outcomes for participants from funding strategies. After the planning process was completed, the My Way Coordinator has been in contact with HD to ensure that he is on track to achieve his desired outcomes. In addition, the My Way Coordinator has been readily available to talk to HD s family when this has been required. Further, the My Way Coordinator has made contact with Activ Foundation to confirm that services were being delivered to HD. CCI does, however, recognise the differences in the demographics between participants in the Perth Hills NDIA trial site and the Lower South West My Way trial site; institutional, historical and cultural factors working together; having a disability system that was already well- established in the Lower South West; and competition between the two trial sites, may have contributed to more favourable access and engagement outcomes in the Lower South West My Way trial site. CCI also recognises the ability of the NDIA to establish close relationships between both mainstream and specialist disability service providers would inevitably improve over time under a national governance model. However, the relationships and experience of DSC with the WA disability sector reflects 25 years of community and sector engagement, and this would take some time to replicate. 18