The Joint Committee of Public Accounts and Audit’s Inquiry into Commonwealth risk management was based on the Auditor-General’s report No. 18 (2015–16) Qualifying for the Disability Support Pension.
Risk management should be an integral part of the way the Australian Public Service conducts business. Risk management in most Commonwealth entities is governed by the Commonwealth Risk Management Policy, issued under the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The goal of the Risk Management Policy is to embed risk management as part of the culture of entities where the shared understanding of risk leads to well-informed decision making.
The Disability Support Pension (DSP) is a complex program providing billions of dollars of support to hundreds of thousands of individuals each year and has been operating for several decades. Effective risk management is therefore vital to ensure administrative efficiency and budget pressures are balanced against the burdens placed on individual claimants and recipients.
The Committee’s inquiry commenced nine months after the tabling of the Australian National Audit Office’s (ANAO) audit report, due to the federal election and reconstitution of the Committee. In the interim period, the Government introduced relevant Budget measures and new assessment and review processes. Given this, the inquiry considered two related but distinct phases:
the ANAO audit period and recommendations arising from the audit report; and
the period since, during which a range of new departmental procedures and processes have been implemented, which were not subject to the ANAO audit.
The Committee examined the risk management, assessment and review processes in place during both the ANAO audit and in the post-audit period. The new reviews and processes are described at the end of this section
The Committee noted that the assessment and review processes audited by the ANAO were found to be in keeping with legislation, policy and guidance. However, following the implementation of new processes, a broader range of concerns raised by submitters were considered by the Committee.
Taking into account the new processes introduced since the audit and evidence submitted to the Inquiry, the Committee concludes there is further scope for administrative and risk management improvements to the DSP program.
The Committee’s recommendations on each of the likely areas for improvement are described below, along with recommendations for an end-to-end departmental review and for the Auditor-General to consider the merits of a follow up audit.
Targeting of recipients for review
The Committee considers that accurate targeting of recipients for review of their disability support pension is essential to efficiently achieve policy outcomes, reduce administrative costs and minimise unnecessary burden on vulnerable members of the public.
The Committee received a number of submissions and heard evidence of poorly targeted reviews by the Department of Human Services (DHS). The Committee notes DHS’s assertions that it has refined its targeting of reviews from the time of the 2014–15 Budget measure to the 2016–17 Budget measure. The Committee is also pleased to note that both DHS and the Department of Social Services (DSS) have implemented steps to improve the guidance for, and documentation of, assessments. If implemented properly, better documentation should assist with future targeting of reviews.
However, the Committee has not been provided with a copy of, or extracts from, the Regulatory Impact Statement for the review measures. DHS cited Cabinet-in-Confidence for Short Form Regulatory Impact Statements as the reason for not providing the Statement. DHS outlined to the Committee some of the criteria used to target reviews for the 2016–17 Budget measure, but provided no information on how this criteria was modified from previous reviews.
Without regulatory impact data, or adequate detail on how the targeting has been refined, the Committee is unable at this time to draw conclusions on the effectiveness of the refined targeting approach.
Therefore, the Committee recommends that the outcomes of the Budget measures be evaluated in order to fully scrutinise the effectiveness of targeting and risk management of the DSP program. This evaluation should explicitly consider:
whether the initial objectives and performance criteria of the reviews were achieved;
any burdens imposed on recipients, and in particular whether certain recipients were more affected;
whether targeting of reviews was effective, including the efficacy of risk profiling and selection criteria;
the cost efficiency of conducting reviews;
trend data between the two reviews; and
improvements to possible future review processes.
Assessment and review processes
DHS has stated that the new evidentiary processes for claims and reviews ‘add an additional level of assurance to the Disability Support Pension claim process.’
However, the Committee found that the time to complete assessments and reviews has increased and that approximately one person in six who appeal an initial rejection is ultimately granted the DSP. Furthermore, two-thirds of reviews under the 2016–17 measures will not be subjected to one step—a Disability Medical Assessment—in the review process.
Evidence suggests that improving the quality of communication with claimants and recipients is likely to improve both decision-making and the timeliness of assessments and reviews while also potentially lowering the number of appeals. The Committee considers this will benefit vulnerable claimants relying on payments whilst minimising costs of reviews and appeals.
In this respect, the Committee recommends DSS and DHS undertake an evaluation of the changes to the evidentiary process introduced to consider:
whether they have led to improved efficiency in assessing new claims and recipients under review;
the consequences and trends for appeals; and
ways to improve communication.
The Committee considers that the current period of 21 days for clients under review to provide documents to support their claim in many cases, insufficient. The Committee is concerned to hear this timeframe has, in some circumstances, caused additional stress on vulnerable individuals and notes the further challenges a short timeframe places on people in regional areas in producing documentary evidence. The Committee recommends that DHS consider the merits for increasing the time given for clients under review to provide documents, noting the evidence that the current period of 21 days has proven insufficient in many cases.
The Committee notes concerns raised by submitters with the Program of Support (POS) requirements and that the definition of ‘severe’ disability may exclude claimants with significant disabilities but whose impairments fall across multiple categories. The Committee recommends that DSS and DHS undertake a post-implementation review of the POS requirements.
The Committee received evidence suggesting that modifications may need to be made to the list of manifest conditions known as ‘List 1’—those conditions where diagnosis alone makes a person eligible for the DSP. The Committee recommends DSS review the List 1 conditions and particularly consider the merits of including chromosomal disorders such as Down syndrome.
Performance monitoring and reporting
The Committee agrees with the ANAO and submitters that the publicly reported performance information regarding the administration of the DSP offers limited information on the sustainability of the DSP or its service delivery. It is therefore difficult to externally analyse the efficiency or effectiveness of the assessment and review processes.
The Committee notes advice from DSS and DHS that the departments are undertaking a review of the performance information that is monitored and published, which is due to be completed in 2017.
This review should be comprehensive—covering new claims, reviews of recipients and the appeals process—and should aim to both improve internal business management and publicly reported information.
The Committee recommends that the departments report back on their progress in implementing the original ANAO recommendations in this area and also on the findings and implementation plans from current relevant reviews.
Review of DSP program
A number of matters of prima facie concern arose during the course of the inquiry that, to date, have not been satisfactorily addressed.
It is apparent—through departmental evidence to the inquiry—that a number of evaluations and reviews of different aspects of the program are currently underway, or planned for the near future.
Given the significant policy changes that have occurred in recent years, the Committee considers that a piecemeal approach to evaluation may not consider the totality of the issues raised. Therefore, the Committee recommends that DSS and DHS undertake an internal review of the end-to-end administration of the DSP program, which involves consultation and engagement with stakeholders.
The Committee recommends that the Department of Social Services and the Department of Human Services conduct an end-to-end review of the administration of the Disability Support Pension program, involving consultation and engagement with stakeholders.
Follow up audit
The Committee recommends a series of evaluations be undertaken on key elements of the DSP, and that the departments involved report back on how they are improving the monitoring and reporting of performance information.
These evaluations should identify ideas to improve the administration of the DSP. However, ideas need to be implemented to see real change.
Therefore, to provide Parliament with assurance that administration of this important national program is refined over time, the Committee recommends that the Auditor-General consider the merits of a follow-up audit and provide advice to the Committee through discussions on the ANAO's work program.
The Committee recommends that the Auditor-General consider the merits of a follow-up audit of the Department of Social Services and Department of Human Services’ administration of the Disability Support Pension. This audit could also focus on the implementation of recommendations made by previous Auditor-General and committee reports.
DHS – engagement with Committee inquiry
It became clear at the hearing that DHS was able to provide information on its progress in responding to ANAO recommendations that would have more appropriately formed the basis of a submission. It would also have been a better use of the Committee's time to receive the information as a submission ahead of the hearing.
As a guiding principle, departments should provide a submission in advance of hearings and, where necessary, an opening statement that is succinct and addresses the matters under inquiry.
A summary of audit report coverage and the new review processes
The audit fieldwork was completed from December 2014 to April 2015.
In 2012 the then Government revised the Impairment Tables used to assess eligibility for the DSP. The audit report examined, among other things, the impact of those changes. The audit report noted that the revised Impairment Tables aimed to taper DSP growth and reduce the number of new grants.
During the audit fieldwork, DHS commenced the 2014–15 Budget measure for medical reviews of recipients under 35 years.
After the ANAO concluded its field work, the Government implemented changes to the evidentiary process for assessing new claims and reviewing current recipients of the DSP. The new processes include requesting raw medical evidence in place of the treating doctor’s report—as part of the Job Capacity Assessment stage—and the introduction of the Disability Medical Assessment as a second stage after completion of a Job Capacity Assessment.
As the reviews of recipients under 35 years progressed, those individuals were then reviewed under the new processes. Then in the 2016–17 Budget, the Government announced another measure to review 30,000 DSP recipients per year for three years.
Due to the timing, the ANAO did not audit the new review measures or assessment processes.