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Ensuring better insurance for Australians
Is the National Disability Insurance Scheme the elephant in the room?

The Policy Forum May 9 2019

Gemma Carey

For such a large and contested policy, the National Disability Insurance Scheme (NDIS) has received surprisingly little attention in the run-up to the election. This was, at least in part, due to Scott Morrison’s strategic move to make major funding commitments to the scheme before announcing this year’s Budget.

The Coalition Government argues that one of the strengths of the proposed 2019 Budget is the $2.1 billion surplus it offers. Out of the five major savings, the largest comes from the underspend on the NDIS – contributing $1.6 million to the bottom line. This was attributed to a “slower than expected transition of participants into the NDIS”.

While seemingly a banal issue of administration, this statement masks the struggles and vulnerabilities of those trying to use the scheme.

More on this:Australia has a drug problem

Individuals who have not been able to ‘transition’ into the scheme face long waits without access to services; all the while, the previous disability support system is now all but unravelled in preparation for the NDIS.

What is not mentioned in the justification behind the underspend is that many participants have money in their plans they haven’t been able to spend, which is then repurposed across the scheme.

This is because the new national disability markets, from which NDIS participants purchase services and supports, are still developing. Participants may have the money, but there are no services to buy.

‘Plan underspend’ – or ‘Budget surplus’ in this case – represents unmet needs within the community. While the Coalition has argued that tax relief will be welcomed by ‘hard-working Australians’, this is at the expense of some of the most vulnerable Australians.

In its strategic pre-Budget move, the Coalition has also raised prices within the scheme. Substantial increases will be seen in two key areas: one-to-one care and community participation.

recent report released by The Centre for Social Impact UNSW in conjunction with National Disability Services found that, across the disability sector, organisations are struggling to remain financially viable at the current pricing arrangements. The boost in prices will enable more providers to stay afloat, offering more choice and control to participants while keeping the vision of the NDIS alive.

The NDIS has been widely criticised for having ambiguous eligibility criteria. The NDIS Act states that people must have a permanent disability, and once eligible, they will be issued with resources to cover ‘reasonable and necessary supports’.

The line between health conditions and disabilities is naturally blurry: health can lead to disability, but problems with access and social exclusion associated with living with disability can lead to poor health.

As a result, people have been refused access on the basis that they have a lifelong and permanent health condition rather than a disability. Those with short life expectancies, unclear diagnoses, or relapsing-remitting conditions – like multiple sclerosis – are sometimes excluded from the scheme despite experiencing functional difficulties.

Additionally, what constitutes a ‘reasonable and necessary’ service is left to the discretion of frontline government officials who might have varying notions of how needs should be met under the scheme. An overall boost in funding could see less harsh eligibility criteria.

Bill Shorten has promised in a sweeping statement that, should it be elected, the Labor Party will “get the NDIS back on track”. While a welcome gesture, Shorten has hardly offered any detail. Really, the only clear policy action that has been offered so far is a promise to lift the staffing cap on the main implementation agency – the National Disability Insurance Agency.

The NDIS has been subject to a range of government audits and inquiries, which all found that the scheme was under-resourced and under pressure.

Enabling the Agency to hire more staff will relieve some of the associated burdens while helping participants transition into the scheme in a timelier and smoother manner.

In early May, Labor responded to public pressure around the scheme by announcing plans to create an NDIS Future Fund. Underspent funds from the NDIS that currently go to other areas of government will return to the scheme under the new initiative. This is a welcome development, but a Futures Fund alone will not address the implementation challenges which are hurting many – and often the most vulnerable – Australians.

A return to the original blueprint would see a more functional and sustainable NDIS into the future. There are also key features of the scheme – Local Area Coordinator roles and community capacity building projects, for example – which have fallen away that should be reintroduced. Regardless of the election outcome, transparency around NDIS funding and spending should be a priority alongside the removal of the staffing cap.

Actions government can take to address thin markets and market gaps in the NDIS

The Mandarin 

By Gemma Carey & Eleanor Malbon • 22/10/2018

Social researchers Gemma Carey and Eleanor Malbon highlight how the NDIA can detect market deficiencies and what strategies it can use to address them.

Out-of-control NDIS markets are leading to unfair and inequitable access to care services. Calls for management of the NDIS market are increasing rapidly as the scheme progresses.

There have been a number of high-profile calls for better market stewardship for the many NDIS markets and sub-markets nationally, most recently the market readiness report from the Joint-Standing Committee on the NDIS.

The committee recommends clarity of roles regarding market stewardship across the major agencies – the National Disability Insurance Agency and the Department of Social Services.

Meanwhile, documents released from the NDIA on market stewardship set out principles for stewardship, and goals of NDIS markets. For example, the Market Statement of Opportunity and Intent states that stewards should facilitate, monitor and observe and alter market rules.

There is an urgent need to go beyond principles and collate actual evidence of what governments and government agencies can do in practice to steward quasi markets such as the NDIS market.

Based on a systematic review of international literature on market stewardship interventions, our research identifies actions governments can take to address thin markets and market gaps.

For a comprehensive review of market interventions and their adaptation to the NDIS you can read our full report here.

The most effective interventions identified were:

  • Flexible pricing and price setting responsibilities

Price is one of the major levers for market stewardship in the NDIS.

The NDIS has a complicated system of price setting. Firstly, there are different pricing rules depending on the sort of budget administration that a participant undertakes. NDIS budgets can be administered by the participant (‘self-managed’), or be managed by the NDIS, or a combination of both (1). If a NDIS participant is ‘self-managed’ then they can negotiate prices directly with a service provider, using NDIA prices as a guide. When a participant’s budget is administered in conjunction with NDIA the prices are far less flexible and at times fixed (5).

The majority of participants are NDIA managed or co-managed (around 90%). This means that the majority of the NDIS quasi-market operates under fixed prices. These prices are set by the NDIS actuaries.

According to the NDIS Act (2013), expenditures must ‘represent value for money’ and the ‘long term sustainability of the scheme’. As recent research has pointed out, this means that “the NDIA is not authorised to set prices in response to market issues” such as gaps in care services. This is problematic, as in order for the NDIS to meet its policy goals, prices ought to be adjusted to reflect gaps in supply.

Many of the interventions identified in our review require flexible pricing arrangements that are responsive to local market conditions. The evidence also suggests that this should include devolving price setting responsibilities to those with more market intelligence (i.e. local level actors such as regional NDIA offices).  This would of course mean a major restructuring of pricing in the scheme and have to be managed carefully

  • Information sharing

Information sharing regarding supply and demand was found to be key to ensuring market effectiveness. At present, information shared by the NDIA is very limited.  

The NDIA could release data or more detailed position statements on supply and demand at a local level across Australia (i.e. LGA level nationwide). This will enable service providers to position themselves to meet gaps in the market where service provision is dangerously low or absent.

There has been concern that such detailed market position statements will pave the way for ‘profiteering’ providers, so we recommend coupling detailed market position statements with powerful regulation over the quality of service provided through the NDIS Quality and Safeguard Commission.

  • Equity interventions

There has been growing concern about unequal access and benefit for NDIS participants that have complex needs or live in remote areas.

Actions taken to address equity internationally included:

  • Additional subsidies for vulnerable groups

  • Direct payments to particular geographical areas to build up staff and expertise through increased demand

  • Provider of last resort

  • Greater funding given to people in areas of more need

Is there capacity to act?

The actions identified in our review require significant capacity within the NDIA if they are to carry out this diverse array of market stewarding actions across the many markets and sub-markets nationally.

The actions identified in our review for good market management of quasi-markets require high levels of capacity for monitoring, quality and safeguarding and information sharing. However, a lack of capacity has been noted by several high-profile reviews of the NDIA, including the National Audit Office and the Joint Standing Committee.

This begs the worrying question about whether the NDIS currently has the capacity to steward the NDIS markets effectually to meet its goals of enabling people with permanent and significant disability to access necessary care Australia-wide. We recommend that the NDIS is given greater capacity to steward the NDIS markets, including greater resources and the removal of the staffing cap.

What are NDIS scheme actuaries measuring and what are they missing?

By Gemma Carey, Helen Dickinson, Michael Fletcher & Daniel Reeders • 01/08/2018

The packages created for individuals under the National Disability Insurance Scheme are personalised — but when it comes time to evaluate whether they were successful, the approach is focused solely on costs and one-size-fits-all.

Most of us are familiar with actuarial approaches, though we may not be aware of them. If you have house insurance, insure your car or have a job (where you are covered by work cover) the premiums you pay are based on actuarial modelling.

Actuaries and actuarial modelling are central to the operation of the National Disability Insurance Scheme. Internationally, the way that actuaries are used within the NDIS is very unusual although it is something that has not been written about extensively.  If you have heard about actuaries and the NDIS it is probably because the outsourcing of this function made the news, largely due to $2.3 million that is being paid out on this over 5 years.

In this piece we unpack this role, describing the function of actuaries in the scheme and the limitations in the ways in which we are using them.

Where do actuaries fit in the scheme?

Actuarial analyses are central to insurance principles, allowing the calculation of the expected future funding liability and targeting of investment in areas that create the largest reduction in future costs. Within the NDIS the actuarial approach“aims to ensure that long-run scheme revenues (premium income) remain aligned with scheme costs (reflecting service utilization and unit costs)”. Within this approach, early intervention and targeted investment in certain support services is understood as a way of improving outcomes for an individual, while reducing overall lifetime expenditure across a number of different parts of government.

The NDIS Act outlines that the Scheme Actuary is responsible for overseeing and ensuring the financial sustainability of the scheme. Official duties of the Actuary, are to assess: (i) the financial sustainability of the NDIS; (ii) risks to that sustainability; and (iii) on the basis of information held by the NDIA, any trends in provision of supports to people with disability, including (a) the causes of those risks and trends; and (b) estimates of future expenditure of the NDIS. However, the Act does not authorise public monitoring and evaluation of how well the scheme is meeting its goals of ensuring choice, control, and better outcomes for individuals.

Supports to be provided under the scheme are based on the principle of providing ‘necessary and reasonable care’. This implies that estimating future costs requires not only adequate data on life expectancy, but also the life-long impacts of factors such as the medical progression of disabilities, the impact of new technologies on what might be regarded as ‘reasonable’, and changes in family circumstances affecting the availability of informal care. There are inherent difficulties in operationalising ideas such as ‘reasonable and necessary care’, which are inherently fuzzy. Moreover, the NDIS Act authorises expenditures only indirectly, as a necessary implication of a provision which requires that expenditures ‘represent value for money.’ This introduces a role for the Scheme Actuary into almost all aspects of the system, since pricing of services and planning personalised budgets all impact upon value for money.

How is evaluation of the scheme done?

Neither the Act nor the initial design outline provisions for meaningful and ongoing monitoring and evaluation of impact, whether against the policy objectives or the participants’ self-identified goals. As a result, ‘value for money’ can only be judged in terms of efficiency – units of service delivered rather than outcomes achieved.

Despite how pivotal actuarial analysis is to the success of the NDIS, there continues to be a great deal of uncertainty about how actuaries operate within the scheme and how accurate modelling can be. As noted by the actuaries, “Analysis conducted by the Australian Government Actuary has confirmed that there are uncertainties around all cost elements of the NDIS, e.g. populations, severity distributions, and average costs”.

To fulfil the mandate set out in the NDIS Act, scheme actuaries require complex and longitudinal data, particularly to ensure continuous monitoring. Serious questions remain over how these data are obtained and its quality, with a current lack of transparency around the monitoring framework being designed by the actuaries and implemented by the NDIA, an agency whose capacity has come under considerable scrutiny. The Productivity Commission report (the blueprint for the scheme) argued that actuarial modelling would also play an important role in evaluating specific services and interventions funded under the NDIS. How this has translated into practice is unknown, as a result of limited transparency with both the actuaries and the NDIA.

The scheme is overly-focused on costs

Normally, actuarial cost modelling of services works through estimating costs based on independent information about prices and expenditures. However, in the NDIS, actuaries set the prices of services and supports, and, to some degree, also make decisions regarding what services are to be provided to whom through the NDIA and planners. For example, the actuaries have advised planners to not be afraid to make large upfront investments in equipment. As noted in the rules for the scheme actuary, the role is to “monitor, assess, and report on consistency of resource allocation across regions, planners, disability type, and other groupings as appropriate”. This could potentially see them involved in planning in a much more hands-on way in the future

The actuarial modelling of NDIS performance focuses solely on costs. As the Productivity Commission notes: “Financial (or actuarial) models measure any discrepancies between expected and actual costs and outcomes, and the adequacy of revenues to meet projected costs over the long-term”. The models explain why such discrepancies may have occurred, and analyse their implications for the financial sustainability of the scheme and its objectives for achieving outcomes for people with disability (either in aggregate or in specific categories). By itself, this modelling is limited in its ability to measure personal wellbeing or social and economic outcomes. It also cannot assess whether participants’ goals are being met, or whether participants experience their choice and control as purely formal (i.e. I get to choose who provides the service) or substantive (i.e. I get to choose how the service is provided). For a more robust evaluation of wellbeing, outcomes, and goals – which is after all the fundamental objective of the NDIS – alternative methods are needed and as the NDIS Costs Report points out, is a more difficult task than measuring costs against cost expectations

To date, there is limited information on benefits to individuals and families, which means that it is not possible to conduct a proper cost-benefit analysis. The NDIA has developed and piloted what it calls the NDIS Short Form Outcomes Framework, which comprises 8 participant domains (including choice and control, daily activities, relationships, home environment, health and wellbeing and life-long learning) and five family carer domains (e.g. whether families have the support they need, whether they know their rights, if they can gain access to desired services). The short form questionnaire does not attempt to assess whether participants feel the services delivered contribute to achieving their stated personal goals, largely because personal goals are so diverse and the instruments being used are not able to measure this.

In other words, while packages in the NDIS are personalised, the measures for success of the scheme are not. The NDIS needs a proper monitoring and evaluation framework that goes beyond assessing costs if we are to understand its real impact on lives.

Markets and Equity

Tuesday, 6th March 2018
Gemma Carey

Market approaches to social service delivery have been used in a range of areas in Australia, including employment and vocational education and training. Where once, these services were all provided by government, a slew of service providers from different sectors now provide them.

Despite less than desirable results, governments are not slowing down the roll out of markets within social service settings. The latest and, arguably, most extensive use of markets is the National Disability Insurance Scheme (NDIS).

Launched in 2013, the NDIS will see the establishment of Australia-wide disability markets, aimed at giving people with permanent and lifelong disabilities greater choice and control over services and supports using a personalised funding model.

What’s particularly challenging about the use of markets in this space is the issue of equity. In the private sector, the main concern of markets is efficiency. For governments, however, there is a responsibility to also ensure equitable access and care. One of the dangers of using markets for the delivery of care services is the sacrificing of equity in the name of efficiency gains. This is particularly challenging in the context of the NDISbecause of the broad range of needs experienced by participants, coupled with huge geographical spread of the population.

“One of the dangers of using markets for the delivery of care services is the sacrificing of equity in the name of efficiency gains.”

Scheme implementers have acknowledged that the creation of markets and sub-markets that can cater for this complexity will take time: “developing a strong, contestable market for disability supports is a long term project”. Arguably, given the geographic diversity (coupled with factors such as the complex needs of participants), without government intervention these markets may not develop at all, or at the very least are likely to develop in highly uneven ways.

Does personalisation of services work?

While the evidence regarding personalisation approaches to funding and care (such as the NDIS) is in its infancy, current research indicates that in some contexts personalisation can lead to greater satisfaction and continuity of care and a more effective use of public resources.

In the United Kingdom, where participants in personalisation schemes opt-in, the uptake has been quite low. Williams and Dickinson (2015) argue that this cannot be put down to a lack of interest, but rather reflects the capacity of individuals to engage in personalised care and of professionals and carers to support people to engage. Most importantly for the Australian context, Williams and Dickinson found some key differences in who is taking up support and likely benefiting from it.

In the UK, the highest rate of take up has been people with physical and sensory impairments, with people with mental health problems and neurological impairments the least likely to opt-in. Similar patterns can be seen in the Australian accident and injury compensation schemes, which the NDIS is based on. These schemes have higher take up by people with physical disabilities rather than neurological impairments such as acquired brain injury. This suggests that personalisation of care can widen inequities between people with different types of disabilities, as well risk entrenching existing inequities which, for example, stem from extrinsic factors such as geographical location.

Stewarding markets – the failsafe approach?

In recent months the Commonwealth government and Productivity Commission began to talk about government needing to play “a stewardship role” for the NDIS. This is particularly important for areas where thin markets may emerge. Thin markets refer to markets that have few or no providers to service a particular need, and can be driven by a wide range of factors. While stewardship to help address thin markets sounds good, what does it actually mean?

There is a great deal of ambiguity around the concept of stewardship. At the most basic level, market stewardship captures a range of roles through which governments can or should be active in public sector markets. To narrow this down, Gash (2014) suggested when it came to stewardship for markets:

  • new providers must be able to enter the market and grow;

  • providers must be competing actively, and in desirable ways;

  • providers must be able to exit the market;

  • those choosing services (whether service users or public officials choosing on their behalf) must be able and motivated to make informed choices; and

  • (as in all modes of service delivery) levels of funding must be appropriate to achieve government objectives.

In order to successfully achieve this, governments must be able to:

  • engage closely with users, provider organisations and others to understand needs, objectives and enablers of successful delivery;

  • set the “rules of the game” and allow providers and users to respond to the incentives this creates;

  • constantly monitor the ways in which the market is developing and how providers are responding to these rules, and the actions of other providers; and

  • adjust 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.

“Currently it is unclear how these groups will work together to ensure they have detailed knowledge of how the market is functioning and where thin markets or market gaps may be developing.”

At present, responsibilities for the NDIS sit across different levels of government and government agencies. This includes Commonwealth government, state governments, the National Disability Insurance Agency and the newly announced Quality and Safeguards Commission. Currently it is unclear how these groups will work together to ensure they have detailed knowledge of how the market is functioning and where thin markets or market gaps may be developing.

Without coherence around reporting and responsibilities for market stewardship, the NDIS risks creating and growing inequities. We have to ensure we are not sacrificing equity in the name of efficiency if the NDIS is going to deliver on the original vision of strengthening the human rights for people with a disability.

About the author: Associate Professor Gemma Carey is a research director at the Centre for Social Impact, UNSW Sydney.

What NDIA’s complaints tell us about outsourcing administration

By Eleanor Malbon & Gemma Carey • 21/05/2018

The National Disability Insurance Scheme’s coordinating agency didn’t predict one factor about its participants — and hoped it would solve itself over time. That’s unlikely, say researchers Eleanor Malbon and Gemma Carey, who have been watching how outsourcing is remoulding the agency.

recent report by the Commonwealth Ombudsman on the administration of the NDIS reveals a backlog of complaints about the plan review process.

Participants of the NDIS are entitled to request for their support plan to be reviewed outside the yearly scheduled review. The support plan details the amount of money that NDIS participants have to spend on their care, with support options covering a wide range of care and infrastructure. For example; from daily support to prepare for work or daytime activities, to one off supports such as the installation of wheelchair ramps in a home. Typically, plan reviews are requested when a decision is considered to be inadequate or incorrect, and most often these errors have a significant effect on the daily lives of people with disability.

The scope of complaints is significant. Of around 1200 complaints made to the ombudsman about the administration of the NDIS, two thirds (400) related at least in part to plan reviews. The National Disability Insurance Agency reported having 8100 plan reviews on the table, as well as receiving around 620 new requests per week in February 2018.

The ombudsman linked the backlog of complaints and requests for reviews of NDIS support plans to under-resourcing of the NDIA, as well as pressures to deliver the scheme on time and in budget. Specifically, requests for reviews of plans could go unanswered for months, leaving NDIS participants in the dark. The ombudsman identified that processes for updating NDIS participants about the progress of their plan reviews were ad hoc. This is consistent with other research which identified that outsourcing thousands of NDIA positions has had implications for the capacity of the agency to fulfil its implementation job.

According to the report, the NDIA did allow for some time and resources for unscheduled plan reviews, however the demand was around three times the expected amount. The NDIA reported to the ombudsman that achieving bilateral targets, plan approvals and schedules plan reviews have been prioritised over unscheduled plan reviews. It seems apparent that pressure on the NDIA to meet its various administrative demands has left little time for dealing with plan reviews of unexpected problems, considered by the NDIA to be “unplanned work” and not given high priority.

The ombudsman’s report provides 20 recommendations for the NDIA to improve internal processes relating to the plan review process. Of these recommendations, six relate to communication from the NDIA to participants, including set timeframes for contacting participants about the progress of their review.

In their article reporting the Ombudsman’s report, the Guardian suggested that Labor will latch onto the report and argue that the NDIA is under-resourced and under-staffed — we would argue the same. Our research examines the outsourcing of the local area coordinator function and the transformation into a planning function which can limit the ability of the implementers to achieve the vision of the scheme.

In our research policymakers have described such complaints as “teething issues” that will be resolved down the track as implementation progresses. However, public policy research indicates that once practices are in place they often become intractable. This means that it is critical to address complaints issues now, rather than assuming they will resolve over time as the scheme reaches maturity.​

Further, there is the danger that the scheme will be considered untrustworthy or unreliable by participants, effecting the relationship between the NDIA and people with disability who will have to interact with the scheme for decades to come. This danger is highlighted in the ombudsman’s report which identifies the “risk that participants’ right to review will be undermined and the review process will continue to be unwieldy, unapproachable and the driver of substantial complaint volumes.” (section 6.3).

The NDIA is accepting the recommendations, with Social Services Minister Dan Tehan telling 2GB radio that: “This was something that was identified some months ago and special teams have been put in place to address this issue.”

We would add to these recommendations that more resources need to go into the administration of the scheme, particularly the NDIA. The current cap on public servants and the recently announced review of the Australian Public Service is a threat to the vision of the scheme.

How can we think about stewardship?

By Katie Moon, Dru Marsh, Helen Dickinson & Gemma Carey • 30/11/2017

The concept of “stewardship” is rising in prominence as a driver of contemporary public service practice in Australia and internationally. The Productivity Commission recently described it as being core to the reform and delivery of human services in Australia; the Commonwealth Superannuation Corporation identifies it as the crux of the trust relationship with its members and the Australian Future Fund has adopted it to guide its long-term asset strategy. The Department of the Prime Minister and Cabinet describes its entire role in stewardship terms.

Although stewardship might seem like a new term in a public service context, it is, in fact, one that has been around for some time and has been applied in diverse ways over the years. In this article we provide some clarity around the concept of stewardship, drawing on our recent research.

Defining stewardship

Reviewing the academic literature reveals at least three universal features of stewardship models. First, definitions or descriptions of stewardship invariably involve a steward taking responsibility for some object or cause to the benefit of others.

Second, stewardship is adopted when resources are constrained. Restricted resources, include environmental, financial, personnel and informational. In some cases, stewardship is required because individual actors do not recognise that the resource is constrained. For example, an individual might not consider their carbon emissions to be a problem, but collectively, emissions have significant consequences for the climate system.

The third common factor shared across definitions of stewardship is that of a beneficiary. Beneficiaries can be clearly identifiable as a group within the community, such as participants under the National Disability Insurance Scheme, or they can be of a more indeterminate character, such as the whole community (to varying degrees) in the case of environmental contexts where ecosystem services, such as clean air and water, are stewarded.

If we examine the literature carefully, we can distinguish between the outputs and outcomes of stewardship. Stewardship outputs are actions driven by a need or desire to achieve an outcome that might need to endure beyond, or operate independently, from a defined policy goal. Stewardship outcomes comprise measurable change/s in at least one of the three universal stewardship components as a result of the stewardship outputs: (1) resource constraints: constraints on a resource are measurably reduced or eliminated; (2) beneficiaries: measurable increase in benefits to beneficiaries; and (3) responsibility: individuals or groups take on a (greater) level of responsibility for a resource, cause or process.

Typology of stewardship approaches

From our research, we developed a typology of stewardship approaches, comprising four composites, each viewing the role and means of stewardship in different ways. These types are not intended to be understood as individuals, per se, but rather are collections of individuals who share beliefs about the purposes and activities of stewardship approaches. It is possible that a number of these different types could be present in any given stewardship setting.

The Guide

Remains responsible for the resource on behalf of the beneficiary

The Guide is defined by a position of responsibility in relation to constrained resources that inevitably means making decisions of compromise. An example of this is a government agency tasked with allocation of public funding in a manner that seeks to achieve fair and equitable distribution of resources while best meeting the objectives of the community. The Guide approach is particularly driven to ensure accountability. The Guide is likely to operate at large scales and set goals over long temporal periods (e.g. government departments with broad responsibility for achieving reduce climate emissions).

The Gatekeeper

Grants access to privately held or controlled resource

The Gatekeeper will have direct control over a resource but will not typically be involved in policy-making processes. Engagement with these actors is necessary to meet policy objectives (e.g. landholders engaged in environmental conservation, private company that controls a publically important resource, or a hospital with good community relationships). Governments (often acting as the Guide) would seek to work with these kinds of stewards to gain access to these resources, but would often not seek to hold the resource directly. The Gatekeeper often operates on local scales and observes success over shorter timescales.

The Giver

Makes a sacrifice for the ‘greater good’ that increases the value or abundance of a resource

The Giver is motivated by a desire to make a contribution by means other than financial or direct reward. In contrast to the Gatekeeper approach, ‘the Giver’ actively seeks to sacrifice individual benefit for that of the collective. Through such a sacrifice, they can effectively extend the resource base (e.g. augmenting payments or delivering service beyond what is required). As with Gatekeepers, the Giver approach typically operates on a local scale, although the giving may be towards a globally significant goal. Such a perspective is likely to favour shorter-term goals, where efforts can be seen to make a positive contribution but can also lead to longer-term collective goals. It is possible that the Giver and Gatekeeper approaches are adopted concurrently.

The Maximiser

Distributes resources for maximum efficiency, utility and benefit of the collective

The goal of the Maximiser is to create “collective benefits” outside of any concept of ethics, volunteerism or sacrifice. This approach might involve processes to help improve the efficiency of allocating resources within a system, attempting to reduce duplication or overlap between public and private resources to achieve greater ‘bang for buck’. For example, this type of approach might be used to generate multiple community health benefits by designing education programs that simultaneously appeal to different sectors. Such a perspective also seeks to identify co-benefits by strategic allocation of resources. In doing so, a Maximiser perspective is not wedded to a particular temporal or spatial scale, but works according to context.

We offer that this typology can be a useful tool in identifying the purposes, beneficiaries and levers of stewardship when developing such an approach (Table 3, see full Issues Paper for more detail). The typology can be a helpful resource to use with stakeholders to discuss the aims and objectives of any stewardship approach and help to identify where potential challenges might arise in terms of different stewardship initiatives conflicting with one another during implementation processes.

Protecting equity in the National Disability Insurance Scheme

By Eleanor Malbon & Gemma Carey • 08/11/2017

The NDIS has the potential to secure gains in health and wellbeing for thousands of Australians living with disability, but this can only be achieved with careful attention to the inequities that arise in the scheme. The NDIS has been beset with implementation issues due to a rushed implementation that has been noted by the Productivity Commission, amongst others.

New research, supported by the NHMRC Centre for Excellence in Disability and Health, shows that the use of the NDIS market to enable choice and control for people in the NDIS is vulnerable to unequal distribution. As the NDIS is structured, choice and control is reliant on the ability for participants to have new and better service providers to choose from. However the rushed implementation means that the danger of ‘thin markets’ – areas with only one or two providers of a disability service – is acute.

The NDIS is not one market, but rather a set of markets in different geographic locations, meaning that the health of markets in regional and remote areas is not reliant on market performance in cities. Markets in remote and regional communities are most at risk of becoming thin markets:

“Thin markets are also susceptible to market failure, where no new providers enter the market place due to high costs of entry or lack of business prospects, and existing providers are challenged by being paid retrospectively for business, gaining the necessary breadth and depth of expertise and business costs running higher than the funds collected via individuals.” (Carey et al., 2017).

The Productivity Commission’s position paper on costs in the NDIS also discusses the dangers of poor implementation for market failures. The Productivity Commission lists the groups that are mostly likely to experience persistently thin markets as people:

  • living in outer regional, remote and very remote areas

  • with complex, specialised or high intensity needs, or very challenging behaviours

  • from culturally and linguistically diverse backgrounds

  • who are Aboriginal and Torres Strait Islander Australians

  • who have an acute and immediate need (crisis care and accommodation).

These are the people for whom the NDIS will not enable equitable access to choice and control of services.

Indigenous may have to relocate from their homelands

Alarmingly, by analyzing past documents the new research found that the original blueprint for the NDIS by the Productivity Commission (written in 2011) explicitly states that Indigenous Australians with complex needs will have to relocate from their communities – and geographical connections to kin and country – in order to receive care in metropolitan areas where the service market is stronger:

“…the diversity and level of care and support available in major cities cannot be replicated in very remote areas. In some cases, Indigenous Australians with complex needs will have to move to regional centres or major cities to receive appropriate care and support (as is also the case with non-Indigenous Australians)”

For the design of the NDIS to call for the relocation of Aboriginal and Torres Strait Islander people with disabilities from their country and communities is unacceptable in terms of health equity and fairness.

If the goal of the NDIS is to offer empowerment to Australians with disability through increased choice and control there must be a recognition that not all individuals will have access to robust or well functioning markets.

Our research notes that there is the suggestion that the federal government may provide continued block funding, contracts, or be a provider of last resort in areas that are facing thin markets or market failure.

We argue that two schemes may emerge under the NDIS “one in urban areas with robust markets, and a second (lesser) scheme subsidised by government in rural and remote areas that continues to offer little choice.”

Attention should be focused on the way that the NDIS works in remote and regional areas, and how to ensure that government subsidised care (which may prevent people with disability from being forced to relocate) remains of good quality and continues to offer choice and control to people with disability in remote and regional areas, many of whom are Aboriginal and Torres Straight Islander people.

The role of cultural integration in effective machinery of government changes

By Gemma Carey & Fiona Buick • 16/08/2017

Despite the prevalence of restructuring efforts in government (and other sectors) many – if not most – change efforts fail to achieve their desired outcomes. This largely stems from the complexities associated with integrating people, managerial styles and different cultures. These challenges were reinforced in recent research we conducted into structural changes within the Department of the Prime Minister and Cabinet.

The PM&C shift entailed moving from a sole focus on coordinating whole of government policy advice to incorporating service delivery functions: “we tried to marry a very large number of service delivery functions into a central agency that had not much experience with service delivery at all … It’s a massive change process for any organisation, but for a central agency that was purely focussed on policy with a little tiny bit of service delivery occasionally, it was a massive shock.”

Hence, the change enhanced the complexity of PM&C’s operations. It involved a rapid increase in the size and change of focus within the agency. These changes meant that PM&C went from primarily being co-located in the one building (in Barton, Canberra) to a considerable proportion of its workforce being geographically dispersed across the country: “the actual central agency was dwarfed by the size, complexity, scale and reach of the new parts that came in … We went from one location in Canberra to 108 locations throughout the country’.” This created both cultural and physical divides between ‘legacy’ PM&C staff and new staff who were merged in.

In the public sector there has been a normative aura around organisational culture. In practice it is often presented as the critical link for achieving desired outcomes, such as joined up working and performance improvement. Yet, culture can also impede performance. This is most likely to be the case in instances where groups with different cultures are merged together (as often happens with Machinery of Government Changes). Our research on the PM&C MoG change is a particularly interesting case for examining these issues because it merged a central agency and line agency functions – bringing together very different cultures.

Practitioners reported there were cultural differences and issues within PM&C at two levels: between the eight groups that comprised the Indigenous Affairs Group, and then between this group as whole and PM&C. Cultural differences across the line agency functions (i.e. the eight groups brought together from different line agencies) were due to the function being dispersed across multiple agencies for over a decade: “The thing about Indigenous Affairs Group is we’ve inherited eight separate cultures, so we’re trying to blend and manage and shape that.”

Key differences were evident in the purposes for which each group existed. PM&C legacy existed to serve the Prime Minister. This meant they were driven by the need to be responsive to the Prime Minister’s requests and provide whole-of-government policy advice within short timeframes. In contrast, the line agencies were concerned with a particular realm of responsibility (i.e. Indigenous or women’s affairs), which often involved undertaking detailed and time consuming work.

“… a lot of the program implementation work is reiterative, it’s developing a series of products whether it be guidelines [or] help manuals for the providers … [whereas with] a PM&C central agency approach, you have to take a very strategic high level [approach]: ‘is this in line with the government’s other 50 million policies? Are there implementation issues? Are there people in my area who need to know about this in case it conflicts with something they’re doing?’”

The inclusion of the Indigenous Affairs function was particularly seen as counter to the way in which PM&C operated, because the sheer nature of dealing with such a politically-fuelled, wicked problem meant that staff had learnt over time to adopt a trial and error approach and acceptance of making mistakes was key to learning. Moreover, the targeted timeframe of outputs was much slower – driven by the difficulties of addressing wicked problems rather than changing political priorities. In turn, this meant that challenges and conflict were evident, primarily due to cultural differences.

What can we learn from this experience?

We found that the politically driven nature of the MoG change meant that the decision to merge functions was made by the government. This means that the rationale for the change was not based on strong organisational or functional principles, nor was there strategic and cultural fit between functions. The political nature of the change also meant that insufficient time was provided to ensure the department could adequately plan and implement the change; nor could it establish the supports necessary to overcome potential cultural barriers. Specifically, it was apparent that the lack of attempts to integrate the disparate groups perpetuated the difficulties with cooperating and coordinating.

Based on this research, we recommend future structural changes consider:

  1. Establishing a team that develops and implements integration strategies. Teams should consider the organisational, process and people matters that are most likely to derive value and enhance integration. We also suggest that integration teams should comprise representatives from all merged entities and from different functional areas to enable a broader understanding and greater effectiveness.

  2. Devote more attention to effective communication. This includes conveying the rationale for change, anticipated benefits and a shared vision and identity for the new organisational unit. This can help enhance clarity and decrease uncertainty.

  3. Use performance management to support employees through change processes. This will clarify expectations and what is required of staff during the change process.

  4. Provide opportunities for groups to engage in dialogue and share ideas, learning and knowledge. This will enhance cohesiveness, cooperation and help to build trust.

  5. Focus on enhancing cultural learning across the newly formed organisation. This can be achieved through holding facilitated discussions where employees from different groups collectively discuss their various ways of thinking and operating and the function they serve. In these discussions, differences can be revealed and discussed to determine how to optimise the strengths of the various cultures and how to minimise conflict, misunderstandings and miscommunication.

Machinery of government changes: could there be a better way?

By Gemma Carey & Fiona Buick • 16/09/2016

Structural changes to government have become a common occurrence in Australia. They are triggered for a range of reasons: political (the will of particular Prime Minister), symbolic (to signal intent about action in a particular area), logistical (to create a more integrated response) or in response to changes to the portfolios of ministers, just to name just a few.

In our research on these so-called machinery of government changes, where structural changes are made to the bureaucracy by merging departments or moving units, we have found that Australia engages an alarming amount of structural change to the public sector.

What is often overlooked when enacting MoG changes is that they tend to be a source of stress. This was shown this week in a story run by the Canberra Times on the first MoG under the current federal government that was said to leave public servants in a state of panic. Our research into recent changes to Prime Minister and Cabinet support this claim. We found that cultural clashes and low morale can be produced by MoG changes.

While MoG changes occur for a wide range of reasons, it is often argued by governments their particular MoGs will create new efficiencies in the public sector.

However, these potential gains can be lost in what one of our research participants called “frictional costs”. By this they meant costs associated with moving people and groups around, including cultural costs, IT costs and industrial relation costs.

The UK government has begun costing MoGs in an effort to reduce their occurrence by showing their high administrative costs. In the UK, some MoGs have been costed as high as £15-30m in extra staffing and building expenditures alone. This does not account for productivity losses or pay increases that often occur due to changes to enterprise bargaining agreements. In 2010, the London School of Economics put the price of creating the Department for Work and Pensions at close to £175m.

At present, even governments with an emphasis on ‘cutting red tape’ have undertaken extreme and costly MoG changes. The Abbott government, for example, undertook one of the largest and most complicated MoGs in the history of Australian government when it moved the Indigenous Affairs function into Prime Minister and Cabinet.

A better way?

Given that governments appear to incur exorbitant financial costs, as well as significant human stress (and associated losses in productivity), machinery of government changes should be used prudently.

“This structure, while creating a heavy workload for ministers, means that the public service does not require structural changes to the bureaucracy.”

Recently, we have expanded our research into MoGs to other Westminster systems. We have found that Canada takes a much more conservative approach to re-shaping the public sector.

High ranking officials in the Canadian government explained that they use Cabinet committees as a coordination tool instead of MoGs. Committees are created around issues of central importance to the government of the day. Currently, the Canadian government has 12 committees. This structure, while creating a heavy workload for ministers, means that the public service does not require structural changes to the bureaucracy. Moreover, by taking responsibility for particular issues (usually a so-called wicked policy problem), committees become a mechanism for integration across government departments.

The other key difference that enables the Canadian government to lean less heavily on structural change is the willingness to locate more than one minister within a department. In Australia, historically each minister is responsible for a portfolio, which is reflected by the structure of a department (which supports that minister).

In contrast, Canadian departments have multiple ministers. We found that they create teams within large departments that answer to a primary minister (though they may brief more than one). In doing so, the Canadian government uses branding instead of re-structuring to put its stamp on the bureaucracy.

If similar approaches were adopted in Australia, we could significantly reduce the administrative costs of government — allowing more public money to be spent on policy delivery.

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