Briefing To Incoming Ministers 2020

About NZDSN

The New Zealand Disability Support Network (NZDSN) is a national network of over 170 organisations – predominantly Not for Profit – that provide support services to disabled people, mainly through contracts with government, and which employ approximately 25,000 people. NZDSN members provide approximately 80% of the volume of contracted disability support services. Our membership covers a wide variety of provider interests including employment support, respite services, residential services, supported living, community participation and other specialised services.

NZDSN is a values-driven network that is committed to social change to achieve inclusive lives and active citizenship for disabled people. NZDSN takes a pan-disability perspective on the sector and works collaboratively with disabled people, their families and allied agencies.

NZDSN is governed by an elected Board from the wider membership and employs a full time Chief Executive with a small support team mostly based in Wellington. We provide a strong voice and policy advice to government on behalf of our members and facilitate innovation and quality with providers.

NZDSN publishes regular sector briefings in which we outline issues and concerns that are significantly impacting service providers and the lives of disabled people and their families and whānau. These briefings offer recommendations to government for addressing these matters and NZDSN’s own commitments to support change.

Here is the link to our 2020 NZDSN Sector Briefing which we strongly encourage you to read.

How NZDSN can work with Government

NZDSN is committed to working with Government and to contribute in the following ways:

  1. We value the current engagement with the Ministry of Health around a joint work programme focused on new approaches to commissioning, sustainable funding and a coherent workforce development strategy. We will continue to contribute constructively while an agreed outcome is in sight.
  2. NZDSN will continue its participation and contribution to a range of working parties and reference groups that advance the governments’ work programmes and priorities in relation to disability policy and services. We value these opportunities to offer the wide range of skills, knowledge and expertise that exists within our membership.
  3. We will continue our programme of work which focuses on growing provider leadership, innovation and quality, particularly in relation to the impact of system transformation and the implementation of Enabling Good Lives principles. This programme has involved hundreds of events with thousands of participants over the last 5 years – including disabled people, family members, support workers and those in leadership roles.
  4. NZDSN undertakes various pieces of work and projects that contribute to the development of data, evidence and quality. Some of this work has been in active partnership with government agencies and we look forward to continuing opportunities in this regard.
  5. NZDSN appreciates and looks forward to the opportunity for regular engagement and discussion with Ministers whose portfolios cover various aspects of disability related policy and services. Ministers can anticipate invitations to attend and speak at our regular conferences and forums.

Format of Briefing

We have begun by summarising what we think should be the five critical priorities for incoming Ministers regarding service provider organisations in the disability sector. These focus on some well-established and long-standing issues that are placing the sector under unsustainable pressure. We then go on to provide further background and supporting information to assist incoming Ministers to understand how these issues have evolved and what their impact is on providers, disabled people and families and whānau.

We want disabled people to be included in everyday life to enrich our society, meet our UN commitments and because it is the right thing to do. To move toward this, and away from the current situation where they are crushed under the weight of governmental indifference, we propose the following priorities for incoming Ministers:

  1. Develop an approach to commissioning for outcomes based on fair and transparent pricing
  2. Develop a social insurance based approach to the funding of disability support through the establishment of a Disability Commission.
  3. Develop a coherent workforce development strategy
  4. Commit to an NZDSN and DSS joint work programme
  5. Implement the planned accessibility legislation


Priorities for Incoming Ministers

  1. based on fair and transparent pricing

While Budget 2020 in May delivered the largest increase in funding for the disability sector for many years both in relation to vote: Health and vote: MSD, the additional funding really only just paid down a “mortgage” that had been accumulating for some time. MSD announced 6% price uplifts for 2020 and 2021 (which still leaves at least a 40% gap between funding and actual costs) while Health is still grappling with the reality of “catch-up” funding and the dilemma of how to balance demand and cost pressures. The recent MOH Disability Support Services increases in spending have been largely driven by the number of people accessing support increasing. The end result was a paltry 1% contract price uplift following several years of nil increases. The reality for providers is year on year net decreases in funding. At the beginning of 2020 the system was short year on year by at least $574 million[i]. By July 2021 we estimate that despite this year’s budget increases the system as a whole will still be short year on year by approximately $600 million – based on a conservative estimate of well-established cost and demand trajectories.

We need an approach to commissioning that:

Is focused on outcomes so that providers have the flexibility to implement changes informed by the Enabling Good Lives (EGL) principles.

Pays a fair and transparent price based on consensus between provider and funder about reasonable cost.

Acknowledges the need for providers to maintain the quality of current service options andto invest in changes that bring about innovations that embed EGL principles in practice.

Deals to the long-standing discrepancy between what government funds itself to deliver services and what it is prepared to pay the NGO sector to deliver the same services. This discrepancy is acutely revealed in the lack of parity in regards to wages between Government and NGO provided services – up to a 25% difference for some roles.

Develops a systematic and ongoing approach that automatically addresses the wage relativity costs that result from pay equity settlements and future fair wage agreements. The cumulative effect has been an additional 3-5% in costs each year for providers over the term of the current pay equity settlement. It is also essential to the recruitment and retention of leadership roles in the sector. Relativity costs will be acute in 2022 because of the requirement to realign wage bands to account for minimum wage increases over the term of the settlement.

For Ministry of Health commissioned services this also means:

For Ministry of Social Development commissioned services this also means:

The discrepancies across the Health, ACC and MSD systems are significant in terms of eligibility, responsiveness, levels of support and funding provided. The system as a whole is fragmented, complex and difficult to navigate. We need much bolder reforms than those offered in the Health and Disability review report and we need to shift the provision of disability support out of the health system. An approach is needed that removes the current discrimination across current systems based on the cause of disability. This requires establishing an independent Disability Commission to:

The development of a social insurance model to fund disability support is essential to enabling an investment approach that can take a whole-of-life view of disabled people’s support needs. We need to move away from the current fragmentation and discrimination across government agencies. Depending on the vagaries of annualised capped budgets inevitably leads to ever more complexity and “managed access” – the active and excessive rationing of access to supports and services from year to year.

There is a strong consensus building across the disability sector that there is a need for bold reforms that would lead to the establishment of a Disability Commission to progress a social insurance based approach. This should be a priority for Government.

The 2017 pay equity settlement focused attention on support worker qualifications. However, since the linking of qualifications with remuneration there has been little done to improve the relevance and fit-for-purpose of the qualifications themselves. Moreover, in an era when there is significant impetus for providers to implement practice and delivery changes consistent with the EGL principles there has been precious little investment in leadership development and specialist roles that are critical for leading change and improving practice. We need clearly identifiable career pathways as these are critical for developing workforce capability and retaining a skilled workforce.

Workforce development funding is scattered across the sector like confetti from multiple sources and in the absence of a coherent workforce development strategy. Some things need to happen with a sense of urgency:

Earlier this year the Director General of Health asked DSS to work with NZDSN to identify a small number of priorities that would form a joint work programme:

“These priorities will be agreed and built into the Ministry’s wider strategic work programme so that they have the full and focussed support of me and my Executive Leadership Team.”

Two priorities have subsequently been agreed to:

The details of this work programme are still being worked on and we are due to report on progress to the Director General on 17 November 2020. It is essential that this work programme is confirmed soon.

NZDSN has been an active supporter of the Access Alliance and we welcome the commitment of the incoming Government to design and introduce legislation that gives effect to access rights for disabled people. This legislation will also give effect to the EGL principles – that the “mainstream” needs to change and accommodate the needs and aspirations of disabled people. This is most pressing in terms of areas including affordable and accessible housing, accessible information, education and employment opportunities, and accessible transport.

Access to affordable and accessible housing is an area that needs serious and urgent attention, rather than just waiting for legislation. A key component to achieving personalised living options whereby disabled people have real choice and control about where and with whom they live is being able to get into affordable and accessible living accommodation. The current policy settings around housing access and affordability present overwhelming barriers that need to be urgently addressed with a coherent cross-government response.

Background and supporting Information

The following sections provide additional context and information that explain how and why we have arrived at our view on priorities for incoming Ministers.

Disability support provider organisations

Disability support provider organisations consist of small to medium-sized organisations providing niche services to a small number of people and operating in only one or two regions, while others are large with nationwide service systems. A few have a strong cultural perspective (for example Māori and Pasifika), and many specialise in working with people with specific impairments (for example sensory, intellectual/learning disabilities, autism). Many have a shared history of being established by passionate individuals (often parents and other family members of disabled people) who were disenchanted by what they experienced as being a lack of responsive and good quality services, with few choices about the supports that were available to disabled people and their families and whānau.

Organisations providing disability support services are strongly values-based and are committed to working in partnerships with individuals and their families and whānau to provide disability supports that meet their needs – whatever they may be. They are passionate about working with people to ensure they can be in control and “get on with living a great life”. The relationship between the disability support provider organisation and individuals may be short term but is more often over several years. Support can take place in communities, in workplaces, in people’s homes or in accommodation facilitated by the disability support provider organisation.

The current provider market place is not as diverse as it needs to be and active stewardship on the part of government funding agencies is needed to address this.

The people we support

It is important to understand the composition of the people being supported in order to contextualise the increasing pressures that disability support provider organisations are facing.

Disabled people and their families and whānau being supported are a diverse population group. The 2013 New Zealand Disability Survey showed that higher rates of disability are found in families living in high deprivation communities and that Māori have significantly higher rates of disability across all age bands.

The report from the Health and Disability System Review (2020) noted that the population receiving Disability Support Services (DSS) is changing. The median age of people receiving disability support services has decreased from 31 years in 2014 to 26 years in 2018 due to the large growth in children (driven by the inclusion of ASD in 2014). The adult population has stayed relatively stable with 8% growth from 2016 to 2018, compared to a 20% increase in the number of children aged 5 to 14 years. The total mix of people is shifting towards those with higher needs. Between 2016 and 2018, the number of people receiving high and very high packages of support increased by 9.6% and 11.0% respectively.

Of the people currently receiving Ministry of Health funded disability support services:

The disability sector is under significant financial pressure

The Health and Disability System Review (2020) highlighted some of the issues and challenges that are impacting on the disability support providers’ financial sustainability, and therefore on their ability to respond to the needs of disabled people, and to be innovative in the way in which they design and deliver supports:

“The health and disability system should be accountable for ensuring that services are available to people right across the country to meet their support needs. This requires an ecosystem of providers who are paid a fair price for delivering services to the quality and service specification standard set out in contracts. For providers of residential services with five or more beds, certification standards also need to be met.

The current model of service delivery relies on non-governmental organisations (NGOs) to provide many of these services. The disability sector has had regulatory changes in recent years, including settlements for sleepovers, in-between-travel, and pay equity for care and support workers. While funding from the Ministry and Ministry of Social Development has increased over the past 10 years to account for the increasing number of people accessing supports, it has not kept up with cost pressures.

Overall, analysis shows that provider sustainability is becoming increasingly fragile. There has been a consolidation of the provider market, generally resulting in larger providers taking over small, often unsustainable providers.

The Review considers that a sustainable, consistent and transparent funding and pricing model should be developed to ensure sufficient services are available and enable providers to deliver high quality and innovative services[iii].”

While Budget 2020 in May delivered the largest increase in funding for the disability sector for many years both in relation to vote: Health and vote: MSD, the additional funding really only just paid down a “mortgage” that had been accumulating for some time. MSD announced 6% price uplifts for 2020 and 2021 (which still leaves at least a 40% gap between funding and actual costs) while Health is still grappling with the reality of “catch-up” funding and the dilemma of how to balance demand and cost pressures. The end result was a paltry 1% contract price uplift following several years of nil increases. The reality for providers is year on year net decreases in funding.

The Health and Disability System Review (2020) stated that:

“Funding for disability support services has not kept up with need. There has been an increase in overspend each year, but no serious attempt to forecast future demand and service requirements, or assess the funding required to deliver these services.[iv]”

If the sector does not get regular contract price uplifts there is a significant likelihood that providers will need to make some difficult decisions about the continuation of some programmes, staffing levels and whether to accept new referrals, particularly for those people who have high/very high and complex needs. Some providers are already in the midst of making these decisions and refusing some referrals where the funding package on offer is patently insufficient to meet even basic costs.

The shortfall in individual funding packages in these circumstances can be several thousand dollars each month. Disability support providers are increasingly caught between a ‘rock and hard place’ as they juggle the competing imperatives of providing services on the one hand and financial survival on the other. Providers are strongly values-based and readily recognise the ethics and consequences for the people they exist to serve when considering whether to accept referrals or to exit people from services. The governing boards of providers are becoming increasingly strident about the need to manage these financial, quality and safety risks in a sustainable manner, especially in the absence of any shared risk between funder and provider. We can expect more providers to be more consistently resisting the pressure to accept referrals when there are such large gaps between funding being offered and the actual costs involved. The idea that the Ministry of Health can simply “contract out” of its responsibilities around health and safety risks and material impacts due to inadequate funding is egregious and legally questionable.

This absence of a shared approach by the Ministry of Health to risk along with a lack of fair and transparent funding is in stark contrast to the relationship that providers have with other funding agencies. For example, Oranga Tamariki and ACC are experienced as trusted partners where agreement on fair and reasonable pricing is quickly established based on an assumption of provider integrity and expertise.

Commissioning and contracting

Funding concerns center around the fact that providers must manage in a contracting environment that is only partially funded and where organizations, not government, bear most of the risk. The market in which disability support providers operate is almost entirely constructed through contracted funding arrangements with government – there is either no or extremely limited scope for providers to pass on costs through fees for service.

The Health and Disability System Review (2020) summed up the situation:

“The current contracting and pricing model for disability support services is based on historic arrangements which have been largely unchanged in the past 25 years. An example of this is Ministry-funded residential care, which has different funding models around the country.

Providers that operate around the country may receive different rates for the same service as funding arrangements vary depending on the geographic location and funders (eg. Ministry, ACC and DHBs). This results in a significant administrative burden for both funders and providers[v].”

One of the most erudite and sensible government papers on commissioning was released earlier this year through the Ministry of Social Development: “Social Sector Commissioning: Progress, Principles and Next Steps.” It offers six principles for improved commissioning which could provide a very useful template for both MSD and MoH to substantially improve on current approaches.

Opportunities and Challenges

The opportunities in front of us are not without their challenges and it is important that we highlight to the Ministers of an incoming Government what we believe to be the “watch points” and risks that lie ahead.

The disability sector is grappling with a series of intersecting priorities which have significant interdependencies and challenges, not the least of which is how we emerge from the COVID-19 crisis.

The design and implementation of “system transformation” informed by the Enabling Good Lives principles is an ambitious approach to create the choice and control that disabled people and families have been demanding for many years, and that many providers have been attempting to implement – usually despite rather than because of the current “system.”

The impact of the COVID-19 pandemic has and will continue to be far reaching.

Both the MOH and MSD response to COVID-19 has involved increasing the flexibility of service specifications – something we do not wish to lose in a return to business as usual.

It has not been lost on any of us that the COVID-19 crisis has propelled funders and providers to explore greater flexibility and approaches that better reflect EGL principles. There is strong momentum to continue in this way and not to return entirely to the way things were before the crisis. Maintaining this momentum will need to be supported by continued flexibility around contracting and sustainable funding to embed new innovations as everyday practice.

A sustainable and flexible funding regime enables both providers and the Ministry of Health to realise jointly held goals for disability support services that implement the Enabling Good Lives principles in practice (a key plank of the DDS draft Disability Directorate Strategy 2020). NZDSN understands that implementing the latest iteration of the RPM along with broader contract price uplifts that match cost of living increases in one budget cycle is not possible, but what we do want is a commitment to make a start to close what is now an agreed and very transparent funding gap over time. A transparent residential pricing model has been “in development” for a decade – it is now likely that the cost of this development to date matches the actual cost of implementing the model – an appalling example of inertia and unfocused leadership by successive officials and Ministers.

In the absence of a plan for sustainable funding we will all get frustrated by a lack of tangible change – providers will be constrained by inflexible contracts and funding shortfalls and the Ministry will not see the outcomes it is seeking for the lives of disabled people and their families. We must use the COVID-19 crisis as a springboard for the change we want to see, not an excuse to stand still and lose the momentum that has begun.

For organisations providing disability support services in such an environment there is an ongoing challenge: responding to the demand for EGL-informed changes to practice, but in the face of a diminishing ability to invest in the innovation required.

A social insurance-based funding approach

The transition from a fragmented system to a universal integrated system can be planned for, designed and implemented over time. It will require consultation with disabled people and families. It must be co-designed and it will require capacity building and the development and implementation of a sustainable funding model.  A social insurance approach to funding that is not wholly dependent on tax revenue is recognised internationally as a way forward and already exists in New Zealand in the form of our own ACC system. Extending the concept to all disability no matter the cause requires bold and innovative policy commitment from government.

There has been a long-standing call from across the sector for a single point of reference for leadership around disability policy and funding, rather than the split responsibilities we currently have across government agencies. The design features of a transformed system that have emerged so far reinforce the need for:

Responsible Ministers need to give serious consideration to implementing this concept if we are to realise the outcomes we are all seeking. We need bold and transformative policy responses.

The Health and Disability System Review report highlighted the endemic discrimination and barriers that disabled people face in having their health needs met in the current health system and this needs urgent action. While the report did highlight the sectors funding and commissioning issues, to suggest that the broader support and access needs of disabled people to ‘enable a good life’ in the wider community can be adequately funded by simply ‘rearranging the deck chairs’ in the current health system structure falls a long way short of bold and transformative policy reform.

A funding regime that offers certainty and sustainability for providers and those being supported is essential to firstly maintain acceptable levels of quality and safety in current services and secondly to spur investment in the changes and innovations that are required to embed EGL practices – and that are increasingly demanded by a younger generation of individuals and families.

We also need to acknowledge that there is a cohort of mostly aging families who are unlikely to be convinced of the need for any changes to some current models of community support. There is also continuing demand from younger families for these approaches as a preference, but also in the absence of viable alternatives – this has accelerated as a result of the impact on families from the effects of the pandemic. Providers are therefore faced with the dual demands of maintaining high quality current service options for some time into the future while at the same time moving towards supporting more personalised approaches to housing, living arrangements and wider community participation, including inclusive employment options. We cannot invest in change at the expense of the quality of current service options.

In order to embark on a programme of change and innovation providers need to do so based on a financial position that enables investment in the change process, its workforce and the innovation itself. The latest iteration of the RPM for example came close to providing that financial base and the confidence to move in new directions that are consistent with the EGL principles (it is now stalled because it is argued that it will require staged implementation over several budget cycles – reinforcing the lack of an investment approach). More broadly, regular contract price uplifts that match cost of living increases will contribute to the ongoing financial sustainability that is a prerequisite to achieving the changes we all want to see.

However, in the longer-term real sustainability will come from a social insurance based funding model that has multiple revenue streams in addition to direct taxation and enables an investment framework to support a whole of life approach.

References

Health and Disability System Review. 2020. Health and Disability System Review – Final Report – Pūrongo Whakamutunga. Wellington: HDSR. This report is available from www.systemreview.health.govt.nz/final-report

Ministry of Social Development. New Zealand. 2020. Social Sector Commissioning: Progress, Principles and Next Steps. This report is available from https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/planning-strategy/social-sector-commissioning/index.html

Ministry of Social Development. New Zealand. 2020. Working Matters: An Action Plan to ensure disabled people and people with health conditions have an equal opportunity to access employment. This report is available from https://www.msd.govt.nz/what-we-can-do/disability-services/disability-employment-action-plan/index.html

The New Zealand Disability Support Network. 2020. Enabling Good Lives Sooner Rather Than Later: Where to from Here? A Sector Briefing from NZDSN. This is available from https://nzdsn.org.nz/wp-content/uploads/2020/06/NZDSN-2020-Sector-Briefing-Final-19-11-2019-1.pdf

[i] The New Zealand Disability Support Network. 2020. Enabling Good Lives Sooner Rather Than Later: Where to from Here? A Sector Briefing from NZDSN. p 15

[ii] Health and Disability System Review 2020. Health and Disability System Review – Final Report – Pūrongo Whakamutunga. p 126

[iii] Health and Disability System Review 2020. Health and Disability System Review – Final Report – Pūrongo Whakamutunga. p 140

[iv] Ibid

[v] Ibid

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