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May 11, 2011

Patricia Scott: Commissioner, Productivity Commission – Key Findings from the Draft Report




PATRICIA SCOTT, Commissioner Productivity Commission



Ladies and gentlemen, thank you for coming to hear my presentation today.

Jon Walsh is the Associate Commissioner for this enquiry. Thank you also to the Alliance for inviting me to give this presentation.

The Commonwealth Government asked us to undertake an enquiry into the feasibility of a National Disability Insurance Scheme. It took a long time to get to this point.

We will finalise the draft report soon, in July. This will follow hearings and further submission on the draft report.

It is quite an open process, very transparent. Our formal due date for responses was the end of April. We are still learning and listening.

We have had many personal responses, I have read all of the personal responses. We have read all of the submissions.

I still find myself taken aback by the deficiencies in the current arrangement.

If you only have a small amount of time, I would suggest you look at the transcript of the Brisbane hearings. I don’t think I would ever anticipate I would have heard what I heard in Brisbane.

The key problems the commission has identified with the current arrangements are that they are underfunded, unfair, fragmented and inefficient. We’ve used the phrase postcode lottery. People’s supports vary depending on which side of the border they live on.

Current problems include families are facing an uncertain future. Because they can’t be confident funding will be there when they need it. There are failures to intervene early, there is lack of clear responsibilities. There is no real choice or power. The system is unsustainable. And that has been told to us by State Governments. It’s inefficient; it’s a maze and has a poor evidence base.

In my naivety, I thought I should start by mapping the current system, and after about two weeks I completely gave up because it was impossible to do! It can’t be done by this human being!

Our key conclusion is that Government’s need to take action, the funding of necessary and reasonable support services for people with a disability should be a core function of Government.

Family and friends and the wider community will always be crucial. No system can or should replace them. But we need better more certain and fairer arrangements. I want to emphasise that phrase core function of government. It does have implications for how it is funded.

Systemic change is feasible and necessary. We suggest in the draft report that there should be two schemes. And there are practical solutions to complex design issues.

I know you are all busy people. The first thing to note is that the draft report may say things you didn’t expect.

There is a lot of detail in the full report.

This is they key findings. This is volume 1 and volume 2 of the full report. I don’t expect many people will have got through the full report.

For those of you have read it all, congratulations. I will take the time to go through some of the key findings because I think it is worthwhile everyone seeing them.

We have independently looked at the current arrangements.

We recommend two, and not one, schemes.
You might have thought that the Productivity Commission is usually about market solutions to problems. And why can’t the private sector and the private insurance sector look after this issue.

The commission is known for taking a very market orientated approach. We did look at that issue, long and hard. We did not consider that the private insurance market is able to operate well in the area of long-term care and support. The insurance cover you would need would be very substantial in many cases. Most people would underestimate the risk and the cost.  The present cover you can get, is not enough for significant, long-term disability. I think people do not appreciate that in the community. You cannot get the cover you need.

If you have half an hour at some stage, maybe to see that compelling testimony from Brisbane, to follow the submissions coming in to government, you may wish to go to our website. We have a key features document, and why should you look, because press reports and some commentary have been wrong. The report does contain a lot of detail. And while I’m not a politician, I do think you should follow what some of the State Governments have been saying in their response to us.

Now, the two schemes.
One scheme will cover all new catastrophic injury and accidents, from all types of accidents, drawing on no-fault accident insurance. The individual state schemes would form the National Injuries Insurance Scheme. This is an injury based scheme for new cases, new accidents

It is the smaller of the two schemes; it would cover catastrophic injuries covering motor vehicle accidents, medical accidents, criminal injury (a rising area of significant injury), and general accidents occurring in the community and the home. It will provide lifetime care and support.

We make reference to the existing motor vehicle accidents schemes. That is because a number of them are well run schemes. They offer lifetime care and support to the standards we think would be well worth replicating in all states and territories of Australia.

It would use as it’s revenue existing state revenue sources such as compulsory third party premiums and we suggest a small increase in rates. It would send useful price signals.

Local governments have very liberal trading laws for pubs and clubs; they provide public transport at nighttime. Otherwise, you end up with criminal injury cases. You can alter people’s behaviour and circumstance in terms of lifelong injury. The scheme would start with only new cases 800 a year. Preliminary cost is estimated at $685 million a year.

It could start in 2013.

You might say, the timeline is ambitious. But state officials have been talking about this for seven years. So we anticipate they could take action fairly quickly.

Now why have two schemes?

You don’t change something if it isn’t broken. And there are good schemes operating in a number of states. Like the lifetime scheme in NSW. A number of people came along to our hearing that spoke very favourably about the traffic accident commission in Victoria. Tasmania has a scheme that has a scheme that has been operating for a long time.

The question we had in our mind was, if there are good schemes operating, can we quickly implement them into our law reform? Still retain premiums and price signals. This is something the states could manage in their existing resources.

Now, to the larger scheme, the NDIS. It would provide universal insurance cover. You may have heard press reports suggesting only 360,000 people would be covered. That is not true. We would provide universal insurance cover. Just as all of us are covered by Medicare. Support would be provided on the basis of reasonable needs. Support would be focused on the individual and their carers. And there would be certainty of support over the long-term and there would be choice in provision of services.

You might want to look at what is available on the website, to see this diagram. But if you can imagine three concentric circles, the first tier, tier one is about social participation and minimising the extent of disability. It is targeted at all Australians. It is ensuring that local government is thinking about access, state governments are thinking about their arrangements in schools and in courts, employers are thinking about rather than getting someone on a 457 visa, what talent is available locally?

Tier two is about information, referral and web services. Trying to address that confusopoly that we heard about. That maze, the fact that I couldn’t map things. That people would receive personal assistance to find out that are support groups in their town, in their local areas. We anticipate that up to 4,000,000 people would receive that sort of personal referral and assistance.

Arranging appointments, finding the right person. Ensuring that people receive real quality referral.

Tier three – this is about individualised packages. People would receive support, it would start from birth for some individuals, it would go to age pensions age, and it would provide support for people who have significant core activity limitations. 225,000 people be eligible. People who have an intellectual disability, probably 50,000 under that category. Early intervention and we acknowledge that no eligibility criteria would be so perfect that some people will need to be in the scheme. We have allowed for the fact that some people would get considerable benefits, that may not fit those first criteria.

Everything is about reasonable and necessary. 360,000 people would receive individualised packages.

People are quoting $6.3 billion that would be $280 per Australian per year. It is half of one % of our GDP per year. The medium gross cost is $12.5 billion. There is already expenditure of about $6 billion now. We are suggesting a doubling of funding. This is the key point, funding from consolidated revenue, according to a strict formula.

Here are the suggestions for the eligibility criteria for individualised packages. People with significant mobility or self case, people who had an intellectual disability, early intervention (and I don’t mean early mean childhood – we refer to the fact people may need intervention when the are diagnosed with MS) and need intervention to retain bladder control. Early intervention doesn’t just mean children under a certain age. This is not what we are suggesting here.

We haven’t used the word severe or profound. I know there are a lot of people talking about severe or profound. We haven’t used that it in our report.

[Patricia Scott talks through her slides]

People with a disability are front and centre. It is their needs, as they see them initially, their assessed needs and the approved spending plan which determines the types and nature of services that they would receive. They could have the assistance of disability support organisation, to help them navigate through the system or to act as a broker, or a personal advocate to help them develop their personal plan to manage the services they want. After the assessment that person would have an individualised package. Individualised, because it is for your set of circumstances. We are proposing that carers if they wished would also be assessed for the supports they need. Funding would then be allocated; some individuals would want to manage their own funds. Some would be happy to have an organisation manage it for them, some would be happy just to nominate the services they are after. At the bottom of the diagram you can see there could be private for profit, ngos, some people may want to pay their neighbours to do their shopping. There would be specialists disability service providers as there are now – and there would be state and local government providing services as well.

There will also be the agency the National Disability Insurance Agency who would undertake the assessment, and finalise working with the individual and their family and their appropriate plan. They would have local people on the ground who would provide people with the support and liaise between the individual and the agency and with other government services. To ensure that people aren’t locked out of services that they should have access and rights to receive.

One of the key elements of our thinking is choice. People would have choice in managing their own package, within rules. Choice of service providers.  Choice if they wish to have a disability support organisation act as their individual advocate or their broker.  In the UK where they have done the route of individualised packages, about 10% of people want to manage their own package. It does vary from local government area. In some cases 40% of people want to manage their package. We noted the experience of some people in Victoria, where there are embryonic individualised packages.
What’s in and what’s out?

In the draft report we just summarised the in’s and the outs.  Which caused a bit of anxiety when people didn’t see their specific aid and accessory.

There are two ways to go with summaries. We talked about home modifications, vehicle modifications, early intervention, funding for innovations, aids and appliances, respite, taxi vouchers.

Back to aids and appliances, as a young policy adviser I was told that if you actually write down really precisely a piece of equipment. There is a chance that in a few years time you’re going to be really embarrassed.
It’s hard to know which way to go. Should I provide a full list so that everyone is comfortable that there is the talking clock and the white cane? Or do I take a chance that there will be some technological breakthroughs around the corner? I’m open to suggestions, we’re still thinking about that one.

What’s outside the NDIS?

Public housing, although we do suggest there should be reform in that area.

Education, health (except early intervention therapies) income support, open employment. We’re especially seeking views about the mental health interface and support for those with psychiatric disabilities, should it be in or out.

The cost estimates are preliminary and we are recommending a doubling of funding based on material we have available at the time of the draft report. We are doing further work on costings. It will come from consolidated revenue, in other words paid for from the budget, using a legislative formula that is paid into a separate account, so there is certainty of funding.

The cost is significant but we are a wealthy country. Our national income is $1.3 trillion per year. The Federal Budget next year is to be $380 billion per. We are talking about $12.5 billion per year. Only $6.3 of that is an increase.

It is our view that the budget costs, while significant, are manageable and affordable.  In reality there are high costs now. Individuals and families face those high cost now, waiting years for necessary services. Individuals and families are worrying about basic services now, respite accommodation basically becoming emergency supported accommodation.  There is a cost to that. Longer and more frequent stays in hospital because appropriate care was not provided at the right time. People giving up paid work, and lost opportunities for paid employment by those that have disabilities and those that care and love them.

We looked at alternative financing; we looked a private insurance we look at the European social insurance models. We looked at state and local government taxes. We looked at the GST. We looked at the levy on personal income tax, and we looked at the idea of a share or earmarked money. For the certainty for individuals and their families, we went for the Commonwealth. The Commonwealth has got better taxes.

We are suggesting that the Commonwealth fund the entire NDIS.

The Commonwealth should pay for the NDIS and States should cut for some very ineffective taxes.

The report does not say an increase in the Medicare levy. That is one way to go – but not the option in the draft report.  The Medicare levy only covers a tiny fraction of the cost of health.  We don’t have a levy for aged pension. We think that is core government business. Why would we need a levy for something that is core government business? If you have a levy at 1.5% for health – how could you increase it enough to pay for all of disabilities? You would have all that confusion. At this stage, we think it should be out of the budget. In a dedicated fund, that is available to the NDIA. The National Disability Insurance Authority to spend on services.

There are many parties that would play a role. There would be the National Disability Insurance Agency; we’re talking about having it independent of government. States and Territories would have a role with who is on the board. Effectively funded by commonwealth taxes. Specialist services and support providers would be key players. There would be links to other Government funded services.  There would be disability support organisations. There would be mainstream services, governments; courts to make sure the NDIA are doing the right thing.

We have heard the message that we didn’t spend enough time mentioning carers and the important role they play and the role for generic advocacy. We got that message.

The individual is at the centre of this model.

Recommended timetable.

The good news is – sometimes our reports are dismissed before they received. I’m pleased to say that State and Federal Governments have already agreed to consider our final report at the Council of Australian Governments Meeting. I don’t know when that will be.

We don’t complete the report till the end of July. I hope that you will be looking out for Government’s response to our final report.

We put a recommended timetable in the report. We suggest that as soon as they can there should be memorandum of understanding. They should establish a task force, full time to work on the transition. They should have an intergovernmental agreement signed by 2013. They should appoint the board immediately after that. They should recruit and train key staff. Build infrastructure, have consultation on finer details, provide information to people and have it’s rollout in a region by 2014. It should roll out nationally, available by all who need it by 2018.

We have had feedback from participants that they think a trial role out should occur in more than one region and maybe in fact in every state that agrees to participate.

Recommended timetable for the injury scheme is a little faster because they have been thinking about it for so long. There could be an agreement as early as February next year. Even earlier if they have a meeting earlier! They could ensure that they have a no fault agreement for those that have fault based schemes. We have suggested in the draft report that they cover all vehicle accidents and medical accidents. Then it could be extended to all catastrophic injuries. And then have an independent review in 2020 to look at how both schemes are preforming and whether in fact there should be consideration of the schemes merging.
Our work finishes on 30 July. My last report was about trade agreements. I don’t know what my next one will be about.  But our work finishes; I thought you should know that. We hand a report over to the government and then it is up to them and their political processes. That will determine when it is released, and that will determine the outcome. I am happy to take questions and you can download the overview, the summary, the full report, hearings and transcript, submissions, including state submissions can be downloaded anytime you like by going to Thank you very much.


>> we will take a couple of questions now. Can you people ask questions? Please let everyone know where you are from so people get to know each other. Just short questions.
I am John from central Queensland. I speak for the Capricorn development application. I am not sure if you read in the Weekend Australian about the NDIS conference. He wrote about the questions around the system as it would be rolled out. I believe the Western Australia Premier already (inaudible) best system in the country. Would you have a comment on a?

>> Patricia Scott

We take all submissions. I don’t think I will get into a discussion about individual submissions..

>> Margaret Stevens
I am at the back here. I am Margaret Stevens from Women with Disabilities Victoria. So far I am of the understanding that this is an overall view. Has there been any perspectives from a gender perspective involved in this?

>> Patricia Scott
Thank you for your question. We have had a number of submissions and commentary provided to us on gender. We did seek information about disability on a gender perspective. We have considered that issue. I don’t think you will find a lengthy section in the report on it. In some ways, if you have individualised needs addressed on a reasonable and necessary basis you don’t need to have a gender in terms of design of a particular program. At the moment we have autism programs and we have 8 oxygen programs. We consider all individual needs, regardless of gender or location or race would receive what they needed.

>> George
Is $12.4 billion going to be enough? How do you define what is reasonable? I am thinking in terms of recognising that we are all have our own views and what we need to live reasonably. How will need to be determined in NDIS?

>> Patricia Scott
A very good question. $12. 5 billion, we are still doing the numbers. If you recall from the large report that at one stage we only had three weeks. The new data that we are after becomes available today.  We’ll be working very hard with those numbers. That is why it is a draft report, and we get to do more work on the numbers.

What constitutes reasonable? We are suggesting that as part of the assessment process, the individual with a disability talks about and identifies what their individual needs and aspirations are, they have a personal plan. Because not everyone has the same needs. Even if they have exactly the same condition – because it depends on the natural support of the community around them. It depends on interest and desires. It starts with the individual identifying what they need, and then there are discussions and an assessment process.

Not everyone is an angel and people can have very high needs – higher than what some people would think is reasonable. There has to be some entry process. For those of you who are about to tell me that in Britain it is all self-assessment… the report does deal with that and it is not all self assessment. There has to be some sort of reasonable check about what constitutes reasonable.

Some of those well functioning States schemes use these terms in legislation. ‘Reasonable’ and ‘necessary’. We recommend the application of those terminologies in a draft report.  People take into account the fact that the scheme needs to be sustainable. But also that individual circumstances must be considered. Somebody living in Aubrey or Drummoyne in Sydney could well get different packages based on what is available to support them in their community.

>> Ann
I am a client representative. You said about aged care that it would be discussed later. What is going to happen when we reach age care?

>> Patricia Scott
Thank you for keeping me honest. I had forgotten. This is a contentious area, and we have had a lot of hearings and testimony about this. It turns out that the government has given the productivity commission an inquiry into aged care at exactly the same time. They finish their work a month before us. It is all backwards and forwards between the two inquires. We haven’t landed this plane at all. We are still very open to ideas. The government terms of reference to us (and they go for about three or four pages) say that we need to look at non-age-related disability. Frailty does increase for many individuals as they age. Coming up with a definition of non-age-related disability is near impossible. We have fallen back to the convenient pension age idea.

We put two proposals in the draft. One is that at aged pension age, If people are already in the scheme and receiving an individualised package, at age pension age they can decide whether they want to receive services from the aged care system or receive their services from their current providers in the disability sector or mainstream sector. The funding however would come from (as it does now) the aged care funding bucket.

The second idea – and this is what happens with some state-based accident schemes – someone is able to determine which part of your need relates to your age and which bit of your need relates to your disability. We thought this sounded very tough, difficult and the source of endless fights. We had a preference for the first one. Something to note, I didn’t say that you are automatically in the aged care sector, it is about where the money is coming from. If you think $12.5 billion is cause for people to think. Imagine what the number would be if we had more aged care needs on top of disabilities. Think about that number.

>> Convenor – Dr Rhonda Galbally
At this stage we have gone over time. I could see heaps of questions, we will find a place to put you back here so we can continue the questions through the day. Patricia is also around, you can talk to her or put them down in writing where the answers could be shared with others. There are many ways to ask a question. Patricia, I hope you don’t mind me of relating a story. You really educated me, quite strongly, when you said that your experience as secretary – especially in communications and industry based the department, it is quite common for industry types to come to government and ask for large amounts in terms of industry. People are determined to ask this amount from our department from consolidated revenue. It indicates how oppressed we are. If that is going to fix problems to a large degree, what a small price to pay. It is about time that money came forward. I thought that was a powerful message, we can have the Productivity Commission crunch the numbers and gave us a solid estimate. As Patricia said, they are not exactly left wing think tanks, pushing things along on that side. This is a conservative body, a market forces saying that it is time, this is what is needed.

I really thank you for your thoroughness. We have a detailed and thorough assessment. It is time something is done. Thank you so much, Patricia.


  • Hi, my name is Melissa. I was born with Spina Bifida & Hydrocephalus, and i’m permanently wheelchairbound. I also have a rare type of anaemia called Diamond-Blackfan Anaemia. Where do people like me come into the NDIS? Are we eligible, or is this only for those who have acquired their physical disabilities, or for those who have intellectual disabilities? I’m terrified that if this gets rolled out, there are going to be people like me who are left behind, because the government is going to think i’m capable of looking after myself longterm, and being able to work fulltime (if i’m no longer eligible for monetary disability benefits).


    • Great Question Melissa,

      The outline of an NDIS as set out by the productivity commission states that a person receiving support from the NDIS would have a permanent disability. The three categories for assessment are: One, people have significantly reduced functioning in self care, mobility, communication or self management and require significant ongoing support. Two, People who have a condition for which early intervention would result in an improved level of functioning. Three people for whom intervention would have significant benefits.

      It is is an assessment based on the needs of the individual not on diagnosis. The NDIS is not restricted to physical disabilities. It covers all people with servere and profound disabilities and recognises that many people have multiple disabilities. The NDIS is designed to cover lifetime care and support. So it covers funding for items like Transport assistance, Therapies, Guide and assistance dogs, Case management and coordination, Specialist employment services, Crisis/emergency support, Aids, equipment, home and vehicle modifications, Personal care, Community access to support community inclusion, Respite, Specialist accommodation, support and Domestic assistance.

      The NDIS is not related to the payment of disability and carer pensions. These pensions will continue to be paid independently to the operation of the NDIS. This being said, the aim of the NDIS is to support people with a disability to participate fully within our community. It is hoped this will lead to more people with disabilities and carers accessing the workforce. Currently Australia is well below the OECD average for the level of workforce participation for people with a disability.

      I hope this answers your question.

  • Core is interesting, but unfortunately the writer was impotent to clear up some questions. But I am positive that the next article last will and testament be better.

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