Referral of inquiry and terms of reference
The Joint Standing Committee on the National Disability Insurance Scheme
(NDIS) was established on 1 September 2016. The committee is composed of five
Members and five Senators.
The committee is tasked with inquiring into:
- the implementation, performance and governance of the NDIS;
the administration and expenditure of the NDIS; and
such other matters in relation to the NDIS as may be referred to it by
either House of the Parliament.
After 30 June each year, the committee is required to present an annual
report to the Parliament on the activities of the committee during the year, in
addition to other reports on any other matters it considers relevant.
The committee is also able to inquire into specific aspects of the
Scheme. On 6 December 2017, the committee decide to undertake an inquiry into
The terms of reference for the inquiry are as follows:
As part of the committee's role to inquire into the
implementation, performance and governance of the NDIS, the committee will
inquire into and report on market readiness for provision of services
under the NDIS, with particular reference to:
- the transition to a market based
system for service providers;
- participant readiness to navigate
- the development of the disability
workforce to support the emerging market;
- the impact of pricing on the
development of the market;
- the role of the NDIA as a market
- market intervention options to
address thin markets, including in remote Indigenous communities;
- the provision of housing options
for people with disability, with particular reference to the impact of
Specialist Disability Accommodation (SDA) supports on the disability housing
- the impact of the Quality and
Safeguarding Framework on the development of the market;
last resort arrangements, including for crisis accommodation; and
other related matters.
This report is comprised of six chapters, as follows:
This chapter (chapter 1) outlines the context and administration
of the inquiry and discusses market stewardship functions, and roles and
responsibilities of agencies and governments.
Chapter 2 examines participants' readiness;
Chapter 3 focuses on workforce readiness;
Chapter 4 discusses provider readiness;
Chapter 5 discusses market intervention mechanisms and thin
Chapter 6 examines the introduction of Specialist Disability
Accommodation (SDA) as a funded support and its impact on the market.
Conduct of the inquiry
The committee received 101 submissions to the inquiry from individuals
and organisations. These submissions are listed in Appendix 1.
The committee also conducted six public hearings:
14 March 2018 in Cairns;
15 March 2018 in Townsville;
17 April 2018 in Perth;
18 April 2018 in Kalgoorlie;
14 June 2018 in Melbourne; and
4 July 2018 in Sydney.
Transcripts from these hearings, together with submissions and answers
to questions on notice are available on the committee's website. Witnesses who
appeared at the hearings are listed in Appendix 2.
The committee would like to thank the individuals and organisations that
made written submissions to the inquiry, as well as those who gave evidence at
the six public hearings. We are grateful for their time and expertise.
Note on terminology and references
References to submissions in this report are to individual submissions
received by the committee and published on the committee's website. References
to Committee Hansard are to official transcripts.
Rapid transition to a market-based
Considered to be the largest social reform since Medicare, the NDIS is
being implemented at a rapid rate and creating a radically new disability
Notwithstanding that individualised budgets have existed in other
countries for some time, the NDIS is internationally unprecedented in the speed
and scale of personalisation and marketisation of public services.
The Scheme is phasing in rapidly around Australia. At 30 June 2018, the
NDIS was supporting 183 965 participants and is now fully operational in all
regions of NSW, SA and ACT.
It is estimated that 460 000 participants will have entered the NDIS by 2020.
The NDIS replaces a system of disability support which was inequitable,
underfunded, fragmented, inefficient, and gave people with disability little
choice and no certainty of access of appropriate supports.
It consisted of a patchwork of block-funded and procured services spread across
state, territory and Commonwealth governments.
The NDIS is underpinned by a new national consumer-controlled
marketplace with enormous growth potential.
As described by the Productivity Commission, the NDIS model of provision
enables funding to 'follow the user', which means that users, rather than
providers or governments, allocate their budgets to the providers, supports and
services that best meet their needs.
For both participants and service providers, this is a radically new
system. It will take time to develop a strong contestable marketplace for
disability supports. It will also take time for participants to learn to make
choices and explore different service options.
Need for government stewardship
Broadly, for public sector markets to work effectively in the case of an
individualised care model such as the NDIS:
new providers must be able to enter the market and grow;
providers must compete actively, and in desirable ways;
providers must be able to exit the market;
service users must be able and motivated to make informed
levels of funding must be appropriate to achieve government
As described in various literature, a degree of stewardship from
government is therefore required and involves the following activities:
engaging closely with users, provider organisations and others to
understand needs, objectives and enablers of successful delivery;
setting the 'rules of the game' and allowing providers and users
to respond to the incentives this creates;
constantly monitoring the ways in which the market is developing
and how providers are responding to these rules and the actions of other
adjusting the rules of the game in an attempt to steer the system
(much of which is, by design, beyond their immediate control) to achieve their
government's high-level aims.
The Productivity Commission found that governments have not always given
sufficient focus to stewardship, and this has contributed to poor outcomes for
In the case of the NDIS, an additional challenge is the need for market
stewardship – a specific form of government stewardship aimed at facilitating
the creation and development of a market.
The NDIA described market stewardship in the following terms:
Market stewardship recognises that when governments implement
policies to increase consumer choice and adopt market based delivery, they must
also oversee how the marketplace develops. [...] If the marketplace is not
working as intended a responsible market steward identifies what action, if
any, it should take to improve the marketplace so policy objectives can be
Market stewardship roles, functions
NDIA Market Approach Statement
The NDIA Market Approach Statement was published in November 2016 and sets
out the role of the NDIA as a market steward during the three years transition
phase to full Scheme in 2019–20. The stated intent of the document is to:
ensure that the NDIS community understands the roles and
responsibilities the Agency has in this new disability marketplace;
build confidence in the marketplace;
ensure accountability for the Agency; and,
create predictability about how this newly developing marketplace
The vision and aim is to 'create an efficient and sustainable
marketplace through a diverse and competitive range of suppliers who are able
to meet the structural changes created by a consumer driven market'.
The NDIA identified a number of functions that a market steward can use
to improve the marketplace:
Monitoring: observing the NDIS marketplace and assessing
whether it is achieving its outcomes. This will be greatly informed by the data
being collected through day-to-day operation of the Scheme, which will
increasingly use longitudinal data to understand market gaps, market/provider
efficacy and to develop responses.
Facilitating: actions that directly influence demand in
the NDIS marketplace and indirect actions to improve the functioning of the
NDIS marketplace. This includes providing information, setting prices, and
developing systems/infrastructure to support market transactions. In addition,
facilitating supports diversity of supplier business models.
Commissioning: direct sourcing of supports or
establishment of preferred provider arrangements supported by controls and
"rules" that must be complied with to participate in the NDIS
The NDIA recognised it will be necessary to play a more active role during
the transition period (2016–19) but sees the market stewardship role lessening
over time as the market matures and consumers are better equipped to exercise
choice and control.
For example, the NDIA foresees its role as price setter becoming
redundant as the market matures:
While the NDIA is responsible for setting the price of
supports during the rapid ramp up of the NDIS, it is envisaged that prices will
eventually be deregulated as the market matures in size, quality and
The NDIA summarised the activities it needed to undertake as part of its
market stewardship role in those terms:
The Agency's market stewardship role will therefore require
monitoring, evaluation, oversight and where necessary, support and
intervention, in pursuit of a sustainable and successful NDIS.
At present, the NDIA has lead responsibilities for: setting pricing and
price controls, producing and communicating market signals, engaging with and
providing information to stakeholders, and developing and supporting an
To date, the NDIA has undertaken a number of market stewardship activities
publication of Market Position Statements in all jurisdictions
delivery of a series of market insight products;
provider communication and engagement including a Provider
eNewsletter and strategic communications on hot topics, and development of a
network model for regional provider and industry engagement;
a provider benchmarking project to deliver information to
providers that will support their NDIS transition and enable better market
stewardship decision making by the NDIA;
further developing market monitoring capability consistent with
the NDIA’s role as market steward with a view to assessing instances where
market intervention by the NDIA is appropriate; and
annual pricing reviews.
Sector Development Fund
As part of market stewardship initiatives, the Sector Development Fund
(SDF) was established to support the substantial changes required in the
disability sector to realise the vision of a flourishing support market driven
by the choices of people with disability.
Now administered by the Department of Social Services (DSS), the SDF
funding supported activities to:
build community capacity and engagement;
increase capacity of people with disability and their families to
exercise choice and control and develop new forms of support to meet the needs
of people with disability;
build disability sector capacity and service provider readiness
to manage the transition;
assist with the expansion and diversification of the workforce
required to meet increased demand; and
build the evidence base about what works.
SDF funding was available between 2012–13 and 2017–18 to support the
transition to the NDIS environment for participants and the disability sector.
At 30 June 2018, the SDF had funded 91 projects and provided over
$105 million in funding to a range of agencies and organisations including the
NDIA, National Disability Services (NDS), state and territory governments,
research entities and consulting firms.
From 1 July 2018, the Jobs and Market Fund (JMF) replace the SDF and has
a stronger focus on growing the workforce in number and capability.
The JMF and other initiatives to grow the workforce are discussed in Chapter 3.
Lack of clarity of roles and responsibilities
As noted by the UK Institute for Government, effective market
stewardship requires governments to clarify roles, responsibilities and
In the case of the NDIS, whilst the NDIA has a lead role as market
steward, it is not solely responsible for market stewardship:
The NDIA has an important shared role as market steward in
the new disability support services marketplace.
According to the NDIA Market Approach Statement, DSS has lead role for
market oversight and a shared role with the NDIA for market monitoring and
The Productivity Commission is of the view that 'although the NDIA is
designated as the market steward, all governments take actions that affect
market outcomes, and so have some responsibility for market stewardship'.
The NDIA says it plays a key role in working with the DSS and the states
and territories to promote the provision of high quality and innovative
supports for participants. 
At the public hearing held on 4 July 2018, the newly established Quality
and Safeguarding Commission (the Commission), which began operating on 1 July
2018 in NSW and SA, acknowledged that it has a role to play in market
monitoring and development but stressed that the role of the Commission does
not 'supplant the role of the agency in respect of market stewardship more generally
and those issues to do with service provision under people's plans'.
The Commission's website says it 'will provide market oversight by
collecting, analysing and advising on a range of unique market information to
identify trends and changes in the NDIS market'.
The Office of the Public Advocate noted in its submission that, 'based
on the NDIS Market Approach strategy, the distinctions between the market
steward (NDIA) and market oversight (NDIS Quality and Safeguards Commission)
Professor Gemma Carey told the committee that 'at the moment, market
stewardship is sitting across Commonwealth government, the NDIA and the new
Commission' and identified that there are no 'clear delineations about how each
of those groups are going to work with each other or intervene in a case of
market failure or potential market failure'.
Dr Ken Baker from National Disability Services called for clarity:
We need clarity about the roles of the different government
agencies involved in market stewardship—the role of the National Disability
Insurance Agency, the role of the new quality and safeguard commission, the
role of the Department of Social Services, the role of state governments.
The Productivity Commission recommended clarification of the roles and
responsibilities of the Australian, state and territory governments with
respect to market stewardship.
In its updated Corporate Plan 2018-2022 released on 27 July 2018, the
NDIA provides information about the DSS role in relation to market stewardship and
DSS plays an important role in developing the new disability
support services market, including having responsibility for supporting and
facilitating responses to workforce challenges; identifying key strategic
market pressures and risk points that may impact on transition; and, developing
a market oversight function that will include the prudential oversight of the
financial viability of providers.
International experiences where government has moved social and other services
towards market-led service delivery show that lack of clarity around who the
market steward is and its functions has compromised the quality of service
delivery and the intended policy outcomes.
The committee is concerned that whilst the NDIA has a lead role as market
steward, it is unclear how it is shared with other agencies, including the DSS,
the Commission and state and territory governments. Importantly, it is
presently unclear how these groups work together to share information and
develop strategies to address key emerging issues in the development of the
The committee believes that in addition to clarification of
responsibilities, there should also be more effective information sharing,
cooperation and coordination between agencies, Australian and state and
territory governments to ensure participant readiness and development of the
market. In particular, market supply issues, which will be discussed throughout
this report, need the attention of all market stewards.
The committee notes that the NDIA Market Approach strategy document does
not articulate the roles, functions and activities of the market stewards
beyond the transition period ending 30 June 2020. The committee believes the
Market Approach strategy needs to be updated. Further, the committee is of the
view that market stewardship will be required well beyond the transition period
as it will take time for the market to mature and participants to learn how to
fully explore service options. The committee recommends that the DSS and the
NDIA urgently develop a strategy document that clearly articulates the roles, responsibilities
and activities of all those responsible for market stewardship.
The committee recommends the DSS and the NDIA urgently develop a strategy
document that clearly articulates the roles, responsibilities and activities of
all those responsible for market stewardship.
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