New book: Public Service workforce of the future

It has been a number of years in the making but our (me, Catherine Needham, Catherine Mangan & Helen Sullivan) edited book Reimagining the Future Public Service Workforce has just been published by Springer.   This book investigates the professional needs and training requirements of an ever-changing public service workforce in Australia and the United Kingdom. It explores the nature of future roles, the types of skills and competencies that will be required and how organisations might recruit, train and develop public servants for these roles.

The book draws on leading international research and practitioners also make recommendations for how local organisations can equip future public servants with the skills and professional capacities for these shifting professional demands, and the skillsets they will require.

Drawing on ideas that have been developed in the Australian and UK context, the book delves into the major themes involved in re-imagining the public service workforce and the various forms of capacities and capabilities that this entails. It then explores delivery of this future vision, and its implications in terms of development, recruitment and strategy.

Stay tuned for news of a book launch!

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The Next Industrial Revolution? The Role of Public Administration in Supporting Government to Oversee 3D Printing Technologies

I have been working on a paper on 3D printing and public administration for just over two years now.  I am fascinated by 3D printing technologies and wanted to find a way to write about this and am delighted that I have just had a paper published by Public Administration Review on this topic.  The abstract is copied below and you can access the paper free (thanks to UNSW, Canberra for the funding to do this) here.

In recent years, developments in 3D printing have grasped the public’s attention. There are a range of different applications for these technologies that have a number of social, economic, and environmental implications. This essay considers these advancements and what the role of government should be in overseeing these technologies. It argues that although these technologies have been absent from the public administration literature to date, there is an important role that the field can play in supporting governments in this endeavor. In illustrating this, the final section of the essay draws considers how a multilevel governance framework of technology might allow us to consider the broader implications of these technologies.

Competition and collaboration between service providers in the NDIS

In recent decades governments in industrialised nations worldwide have been embracing marketbased models for health and social care provision including the use of personalised budgets. The Australian National Disability Insurance Scheme (NDIS) which commenced full implementation in 2016 is an example of a personalised funding scheme which has involved substantial expansion of public funding in disability services. The scheme involves the creation of a competitive quasi market of publicly funded disability service providers who had previously been block funded and had historical practices of communication and collaborative working.

Research has shown that introducing or increasing competition can impact collaborative efforts between service providers.  I am part of a team who have recently released a report based on qualitative interview data from disability service providers during the roll out of the NDIS to examine the effects of the introduction of a more competitive environment on collaborative working between providers who had historical relationships of working together. The data shows that while collaborative efforts were largely perceived to be continuing, there are signs of organisations shifting to more competitive relationships in the new quasi market. This shift has implications for care integration and care co-ordination, providing insight into how increasing competition between providers may affect care integration.

You can find the full report through the Centre for Social Impact here.

What does the future of care look like?

This article originally appeared on the Power to Persuade blog (find it here)

This is the era of the so called ‘sandwich generation’with busy professionals caring for children and ageing parents. Imagine being able to more effectively manage both sets of care relationships via a series of new technologies – and better look after yourself in the process. That’s the future being promoted by a number of startup tech firms at a recent showcase.

Here we saw tech that allows you to monitor your children via smart devices. Through this you can check out where they are, how they are performing in school, how much screen time they are consuming (and remotely cease this if you think it is too much). The next big consumer boom in the med tech space is predicted to be in genomic testing.  So you will know just what to feed your children given your knowledge of their predispositions to certain conditions and intolerances. Your smart kitchen ensures that you are always fully stocked on necessities, by automatically ordering products you run out of.

When you have a few minutes in your day, you check in with your robot life coach to view your own vitals and see how you are tracking in relation to a number of your life goals.  Maybe you even do this while moving around in your autonomous vehicle, which is safer than you personally driving the vehicle and frees you up to work on the move. Your home personal assistants even monitor your speech patterns to check for symptoms of depression or Parkinson’s. 

All of this you can do safe in the knowledge that your parents are well and being constantly monitored via wearables or in-home robots. These will tell you if they should suffer a fall or if one of a number of pulse, blood oxygen or other readings indicate something of concern.  If anything should cause worry you can be immediately connected to a healthcare professional who can also access your parent’s personal data and advise on courses of action – all supported by artificial intelligence.

Sounds pretty cool, right? There are huge number of companies emerging that are keen to support you to more effectively “manage” your personal and collective caring responsibilities. But what costs does this come at and are there aspects of this we should be concerned about?

“If your DNA is being profiled who are you happy being able to access this? Maybe you want your GP to see this, but what about your insurance company?”

These potential applications raise a number of important questions, many of which have ethical and moral dilemmas.  How safe is this data that is being shared and who owns it?  Blockchain is widely employed as a way of ensuring that this is kept and transmitted safely, but is this infallible? If your DNA is being profiled who are you happy being able to access this? Maybe you want your GP to see this, but what about your insurance company? What about researchers? With a big enough data we might be able to make some new breakthroughs in the health arena. So should we all consent to share our anonymised and aggregated data?  The recent response to the My Health Record scheme suggests that many of us are wary about this.

Would knowledge of genomic predispositions make us behave more “rationally”? If you knew that you were more likely to develop heart disease would you eat more healthily? Conversely, if this wasn’t a worry for you would you then engage in more “risky” behaviours? If we know one thing for sure it is that people don’t always behave in ways that are predictable or considered the more ‘rational’ option.

Some of the companies we spoke with talked about offering incentives to individuals to share different aspects of their data in return for vouchers or discounts off other products and services.  While this avoids a situation where individuals are not rewarded for the use of their data, it raises potential equity issues.  Those most likely to respond to such incentives are likely to be those of lower socio-economic groups.  Indeed, the Australian Human Rights Commission has recently raised a number of concerns relating to technology and their potential to enhance inequities.

Although the discourse around many of these technological developments is that they should make us more “safe”, there is already evidence that suggests reason for concern. Addiction to technology is a real concern for many, particularly in relation to younger children. China has uniquely set legislation addressing this after concerns about wellbeing and intense game play regarding on-line game Honour of Kings. The developer, Tencent, responded by limiting users to the amount of time they can spend on the game and at what times. Although welcome by some, this a blunt approach and does little to address our obsession with electronic devices more broadly.

A feeling of safety in many of the examples we came across typically also involved some significant surveillance, either via camera, by data or a combination.  Although this might lead to some of us feeling more secure, for others this could come with concerns about issues of human rights.  A recent story in the New York Times highlights the issues associated with the expansion of facial recognition software and surveillance in China and some significant concerns about this within the context of an authoritarian regime.

It is clear that there are some exciting developments to come in the technology space that will have a profound impact on our everyday lives. But these developments also bring with them a series of potential negative impacts and associated ethical and moral concerns.  Although some of these developments are some way in the future, many of these exist in our everyday lives now.  Yet, one of the issues we are coming across in our research into the use of robots in care services is that governments are not yet systematically having conversations in a widespread way about what these technologies mean in terms of the ways in which we design and deliver public services and some of the challenges that these raise.  A failure to consider these issues will likely mean that the first time we ever really consider these issues is when some sort of incident arises, by which time it will be too late.

While there is much to be excited about in terms of the future of care services, there are some developments that should give us pause for thought. It is a future we need to prepare for to ensure that we get the type of care services we want and need.

This post contributed by Catherine Smith, Melbourne Graduate School of Education, University of Melbourne and Helen Dickinson, Public Service Research Group, University of New South Wales, Canberra.

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

This post first appeared on Power to Persuade

 

In this post, Gemma Carey (@gemcarey), Helen Dickinson (@drhdickinson), Michael Fletcher and Daniel Reeders (@engagedpractx)examine the role of National Disability Insurance Scheme (NDIS) actuaries, describing their purpose in the scheme, the limitations in the ways they are used and the implications. A full account of their research can be found here.

 

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 (NDIS).  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 authorize 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 authorizes 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 personalized 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 personalized, 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.

Outcomes-based commissioning and consumers

A new report has just been published by the Sax Institute based on a piece of work that myself, Katie Moon and Karen Gardner. The NSW Department of Family and Community Services (FACS) commissioned this review to explore which approaches to outcomes-based commissioning have been effective in improving client outcomes in the human services sector. Stage One of this review found that very few studies actually explored the impact of commissioning on consumer outcomes. Stage 2 examined literature about when and how consumers have been involved in the various stages of the commissioning cycle, then searched for evidence within that literature about improvements to client outcomes.

Although many sources described the theoretical benefits of consumer engagement, little empirical data exists to demonstrate these outcomes in practice. Perceived benefits of consumer engagement fell into two categories: benefits for consumers participating in commissioning processes and improvements in services, including to environments (e.g. decor, food) and access. The review revealed no evidence of the effectiveness of outcomes-based commissioning in improving client outcomes. The most universal element of the reviewed literature was the description of the challenges of consumer engagement in commissioning and recommendations about how to undertake it effectively.

We conclude that, as both commissioning and consumer engagement are relatively new fields, there is an opportunity to grow the evidence base in coming years, especially if we can achieve consistency about how engagement and commissioning processes are described and measured.

You can download the full report you can find it here.

Research – nothing about us without us

The Consumers Health Forum of Australia (CHF) is the national peak body representing the interests of Australian healthcare consumers. CHF works to achieve safe, quality, timely healthcare for all Australians, supported by accessible health information and systems.  One of the things they do in meeting these aims is produce a journal called ‘Health Voices‘ which is published two times a year to promote debate on health care issues affecting all Australians and of interest to health consumers, government and industry.

The latest issue focuses on how consumers can influence research.  I have the privilege to have a piece in this issue alongside a number of leading research and consumer engagement voices, which I have written about a the co-produced project on the NDIS which I have previously written about in this blog.  In this I reflect on what we learned about doing consumer-engaging research and where next for this field.  The full article is open access and can be found here.

Power in Editorial Positions: A Feminist Critique of Public Administration

In recent years I have had the great privilege of being involved with a great group called Academic Women in Public Administration (AWPA).  AWPA is a network of academic women in public administration seeking to address gender issues in the field.  They organise some great events, provide information about upcoming roles and opportunities in the field and mentoring opportunities.  They also have some good GIF game if you follow them on Twitter (@AWPArocks).

Through AWPA I had the pleasure of virtually meeting the wonderful Mary Feeney who is an Associate Professor at Arizona State University.  We got talking about some work she had done looking at journal leadership and gender equity and decided we would develop this into a journal article.  We were joined by Lisa Carson who is a fantastically talented post-doctoral fellow with us at the Public Service Research Group and the resulting publication has just appeared in Public Administration Review.  The abstract for this is reproduced below:

Journal editors serve a vital, powerful role in academic fields. They set research priorities, serve as gatekeepers for research, play a critical role in advancing junior scholars as reviewers and eventually into editorial roles, build extensive networks, and gain valuable insight into the behavior and preferences of reviewers and scholars. This article analyzes data collected from leading public administration journals in 2017 to investigate the role of women as gatekeepers of public administration knowledge. The data illustrate a clear underrepresentation of women on editorial boards. Drawing from these data, research on journal editorships, and feminist theory, the authors present a critique of the current state of public administration research and a discussion of a way forward. They conclude with a proposal for how all public administration scholars (junior, senior, men, and women), journal leadership, and academic departments can move toward increasing women’s representation in these important positions.

If you are interested in reading the paper in full then you can access this here, it is open access so you don’t need to be able to access a journal library to get it in full.

Budget 2018 boosts aged care, rural health and medical research: health experts respond

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A$1.6 billion over four years will allow 14,000 more older Australians to remain in their home for longer.
Tanoy1412/Shutterstock

Kees Van Gool, University of Technology Sydney; Andrew Wilson, University of Sydney; Helen Dickinson, UNSW; Lesley Russell, University of Sydney; Peter Sivey, RMIT University, and Rosalie Viney, University of Technology Sydney

The winners of this year’s health budget are aged care, rural health and medical research.

The government has announced A$1.6 billion over four years to allow 14,000 more older Australians to remain in their home for longer through more high-level home care places. For those in aged care, an additional A$82.5 million will be directed to improve mental health services in the facilities.

The budget includes A$83.3 million over five years for a rural health strategy, which aims to place more doctors and nurses in the bush and train 100 additional GPs.

There’s A$1.3 billion over ten years for a National Health and Medical Industry Growth Plan, which includes A$500 million for new research in the field of genomics.

Other key announcements include:

– A$1.4 billion for new and amended listings on PBS
– A$302.6 million in savings over forward estimates by encouraging greater use of generic and bio similar medicines
– A$253.8 million for a new Aged Care Quality and Safety Commission.




Read more:
Infographic: Budget 2018 at a glance


Aged care

Helen Dickinson, Associate Professor, Public Service Research Group at UNSW

It was well foreshadowed that this budget would bring with it significant provisions for aged care. It has been widely reported that reforms to pension and superannuation tax have resulted in disaffection in the Coalition within older age groups.

Making older Australians the cornerstone of budget measures is a calculated political tactic in a budget that in the short term makes only limited tax cuts for low- and middle-income earners.

The A$1.6 billion for 14,000 new places for home-care recipients will be welcome, but are a drop in the ocean, given there are currently more than 100,000 people on the national priority list for support.

Additional commitments around trials for physical activities for older people, initiatives to improve connections to communities and protections for older people against abuse will bolster those remaining in homes and communities.

Commitments made for specific initiatives for Aboriginal and Torres Strait Islander people and aged care facilities in rural and remote Australia will be welcomed, although their size and scope will likely result in little to address older age groups with complex needs.

While investment in aged care services will be welcome, it remains to be seen whether this multi-million-dollar commitment will succeed in clawing back support from older voters.

Recent years have seen around A$2 billion of cuts made to the sector through adjustments to the residential care funding formula. The current financial commitments go some way to restoring spending, but do not significantly advance spending beyond previous levels in an area of the population we know is expanding substantially in volume and level of need and expectation.

A number of new budget commitments have been announced in relation to mental health services for older people in residential aged care facilities, for a national mental health commission, and for Lifeline Australia.

However, given the current turbulence in mental health services, it’s unclear whether these will impact on the types of issues that are being felt currently or whether this will further disaggregate an already complex and often unconnected system.

It’s unclear whether this will be enough to win back older Australians’ support.
U.J. Alexander/Shutterstock

Equity, prevention and Indigenous health

Lesley Russell, Adjunct Associate Professor, Menzies Centre for Health Policy at the University of Sydney

The government states its desire for a stronger economy and to limit economic imposts on future generations, but this budget highlights a continued failure to invest in the areas that will deliver more sustainable health care spending, reduce health disparities, and improve health outcomes and productivity for all Australians.

We know what the best buys in primary prevention are. But despite the fact that obesity is a heavy and costly burden on the health care system, and the broad agreement from experts on a suite of solutions, this can is once again kicked down the road.

There is nothing new to address the harms caused by excessive alcohol use or opioid abuse.

The crackdown on illegal tobacco is about lost taxes rather than smoking prevention.

There is A$20.9 million over five years to improve the health of women and children – an assorted collection of small programs which could conceivably be claimed as preventive health.

There is nothing in this budget to address growing out-of-pocket costs that limit the ability of many to access needed care.

Additional funding (given in budget papers as A$83.3 million over five years but more accurately described as A$122.4 million over 2018-19 and 2019-20, with savings of A$55.6 million taken in 2020-21 and 2021-22) is provided for rural health that should help improve health equity for country Australians.

Continued funding is provided for the Indigenous Australians’ Health Program (A$3.9 billion over four years); there is new money for ear, eye and scabies programs and also for a new Medicare item for remote dialysis services.

There are promises for a new funding model for primary care provided through Aboriginal Community Controlled Health Services (but no details) and better access for Indigenous people to aged care.

The renewal of the Remote Indigenous Housing Agreement with the Northern Territory will assist with improved health outcomes for those communities.

PBS, medicines and research

Rosalie Viney, Professor of Health Economics at the University of Technology Sydney

The budget includes a notable increase in net expenditure on the Pharmaceutical Benefits Scheme (PBS) of A$1.4 billion for new and amended listings of drugs, although most of these have already been anticipated by positive recommendations by the Pharmaceutical Benefits Advisory Committee (PBAC).

Access to a number of new medicines has been announced. The new and amended medicine listings are clearly funded through savings in PBS expenditure from greater use of generic and bio-similar medicines, given the net increase in expenditure over the five year outlook is around A$0.7 billion.

The budget includes A$1.4 billion for pharmaceuticals.
Iakov Filimonov/Shutterstock

In terms of medical research, there is an encouraging announcement of significant further investments through the Medical Research Futures Fund. This will be welcomed by health and medical researchers across Australia.

What is notable is the focus on the capacity of health and medical research to generate new jobs through new technology. While this is certainly important, it is as much about boosting the local medical technology and innovation industry than on improving health system performance. And the announcements in the budget are as much about the potential job growth from medical innovation as on providing more or improved health services.

There is new funding for medical research, development of diagnostic tools and medical technologies, and clinical trials of new drugs. The focus on a 21st century medical industry plan recognises that health is big business as well as being important for all Australians.

All of this is welcome, but it will be absolutely critical that there are rigorous processes for evaluating this research and ensuring the funding is allocated based on scientific merit. This can represent a major challenge when industry development objectives are given similar standing in determining priorities as health outcomes and scientific quality.

Rural health

Andrew Wilson, Co-Director, Menzies Centre for Health Policy at the University of Sydney

Rural Australians experience a range of health disadvantages including higher rates of smoking and obesity, poorer survival rates from cancer and lower life expectancy, and this is not solely due to the poor health of the Aboriginal community.

The government has committed to improving rural health services through the Stronger Rural Health Strategy and the budget has some funding to underpin this.

The pressure to fund another medical school in rural NSW and Victoria has been sensibly addressed by enhancing and networking existing rural clinical schools through the Murray Darling Medical Schools network. This will provide more opportunities for all medical students to spend a large proportion of their studentship in a rural setting while not increasing the number of Commonwealth supported places.

There is a major need to match this increased student capacity with a greater investment in specialist training positions in regional hospitals to ensure the retention of that workforce in country areas. Hopefully the new workforce incentive program will start to address this.

The budget includes a Stronger Rural Health Strategy.
jax10289/Shutterstock

Hospitals and private health insurance

Peter Sivey, Associate Professor, School of Economics, Finance and Marketing, RMIT University

There was no new money in today’s budget for Australia’s beleaguered public hospitals. The government is still locked in a deadlock with Queensland and Victoria, which have refused to agree to the proposed 6.5% cap on yearly funding increases from the Commonwealth. With health inflation of about 4% and population growth close to 2% the cap doesn’t allow much room for increased use due to ageing or new technology.

There is no change in the government’s private health insurance policy announced last year and nothing to slow the continuing above-inflation premium rises.

On the savings side, there was also no move yet on the private health insurance rebate which some experts think could be scrapped.

Kees Van Gool, Health economist, University of Technology Sydney; Andrew Wilson, Co-Director, Menzies Centre for Health Policy, University of Sydney; Helen Dickinson, Associate Professor, Public Service Research Group, UNSW; Lesley Russell, Adjunct Associate Professor, Menzies Centre for Health Policy, University of Sydney; Peter Sivey, Associate Professor, School of Economics, Finance and Marketing, RMIT University, and Rosalie Viney, Professor of Health Economics, University of Technology Sydney

This article was originally published on The Conversation. Read the original article.

Explainer: how much does the NDIS cost and where does this money come from?

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More Australians are joining the NDIS than predicted, so cost predictions have had to be updated.
Shutterstock

Helen Dickinson, UNSW

Although the National Disability Insurance Scheme (NDIS) is relatively young, there has been much debate over how it will be funded.

Treasurer Scott Morrison recently said Labor had left a A$57 billion shortfall in funding for the NDIS. So many were left scratching their heads at the announcement that next year’s proposed increase in the Medicare levy – which was supposed to cover some of this shortfall – would be scrapped.




Read more:
Turnbull government abandons $8.2 billion Medicare levy increase


So how much does, and will, the scheme actually cost? Who is supposed to pay for it and why is there debate over the funding?

Calculating the costs

These are difficult questions to answer because we lack high-quality data about the extent and nature of disability in Australia. The information we do have is based on predictions, and work is underway to check these are accurate.

The case for creating an NDIS was made by the Productivity Commission in its 2011 inquiry on Disability Care and Support. The commission recommended Australia’s system of inequitable, fragmented and inefficient disability services be replaced by a new national scheme that would provide insurance cover to all Australians in the event of significant disability.

The one thing all sides of politics agree on is the NDIS represents a significant increase in disability spending, which stood at around A$8 billion per year at the time of the initial Productivity Commission report.

Original estimates suggested the NDIS would cover 411,000 participants and cost A$13.6 billion at maturity. However the Productivity Commission now estimates that around 475,000 people with disability will receive individualised support at a cost of around A$22 billion per year.

The A$8.9 billion difference between the Productivity Commission’s original estimates and the current estimate is a substantial gap. But A$6.4 billion of this difference is due to pay rises awarded to social and community services employees.

The remainder is due to the growth in the population and also the inclusion of participants over 65 years who were not included in original estimates. Once we account for these, estimates are fairly close to those originally predicted.

Last year’s Productivity Commission review of costs found the NDIS was broadly coming in on budget. Greater-than-expected numbers of children with autism and intellectual disability were accessing the scheme, but not all those with an individualised plans were able to spend their budgets.

So, for now, the NDIS seems to be tracking as intended. The NDIS budget is estimated to gradually increase over time to 1.3% of GDP by 2044-45 as participants age. Estimates also suggest the scheme will produce benefits adding around 1% to the GDP.

Where the money comes from

The original Productivity Commission report suggested the federal government be the single funder of the NDIS and that revenue to support the NDIS be paid into a separate fund (the National Disability Insurance Premium Fund) to provide stable funding for the scheme.

The Productivity Commission suggested this approach because disability services have long been subject to debate about who should bear the costs of these services: the Commonwealth or the states and territories. Indeed, part of the reason for the NDIS was to guarantee funding for disability services and stop these debates and blame-shifting.

But this isn’t what happened.




Read more:
The NDIS costs are on track, but that doesn’t mean all participants are getting the support they need


The way the NDIS is funded is complex, with revenue coming from a number of sources. The NDIS is funded via a pooled approach from Commonwealth and state and territory governments. The Commonwealth provides just over half of the funding for the NDIS and the rest comes from state and territories. This arrangement is governed by a number of bilateral agreements that are revisited every five years.

At the creation of the scheme, all existing money spent by various governments was directed into the NDIS to cover costs. Then, in July 2014 we saw a first increase in the Medicare levy: from 1.5% to 2% of taxable income.

However, the increased Medicare levy doesn’t meet the full costs of the scheme – just as the levy doesn’t cover all the annual costs of Medicare. This revenue was directed into a special fund for the NDIS, DisabilityCare Australia, which is designed to reimburse governments for NDIS expenditure.

Any additional funding the NDIS needs has to come from general budget revenue or borrowings.

The NDIS Savings Fund Special Account was established to collect the Commonwealth’s contribution to the scheme. This fund pools underspends or savings from across government, protecting these as a forward contribution to the scheme as it grows over future budgets.

Behind the funding debate

Warnings have been sounded about the NDIS’s reliance on multiple sources, fearing it creates a risk of future instability of financing.

When the Labor government originally introduced the NDIS, it said it would fund the scheme through an increase in the Medicare levy, reforms to private health insurance and retirement incomes, and a range of “selected long-term savings” including an increase in tobacco excise and changes to fringe benefits tax rules.

Labor said the combination of these revenue streams would ensure the NDIS was fully funded to 2023. But many of the savings Labor promised were intentional, rather than set in stone, and were not dedicated to the NDIS as the Medicare levy was.

It’s estimated the Commonwealth will contribute around A$11.2 billion to the NDIS in 2019. Of this, around A$6.8 billion will come from the redirection of existing disability funds and the Commonwealth’s share of the DisabilityCare Australia Fund.

This leaves an annual funding gap of around A$4 billion once the scheme becomes fully operational, accumulating to around A$56 billion by 2028.

The Commonwealth announced it would increase the Medicare levy from 2% to 2.5% of taxable income from July 2019 as a way of filling the funding gap. Estimates predicted this would raise an additional A$8 billion in revenue over its first two years.

The bill needed to do this had stalled in the Senate, with Labor and the Greens opposed. They suggested the increase should only be applied to those in higher income tax brackets.

Last week the Treasurer announced tax receipts were running A$4.8 billon higher than was estimated in December, meaning the levy was no longer needed.

For now it looks like funding for the NDIS is assured, but many within the disability community have expressed concern this does not assure funding for the long term and uncertainty may continue to prevail.




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Helen Dickinson, Associate Professor, Public Service Research Group, UNSW

This article was originally published on The Conversation. Read the original article.