Purpose of the Bill

The purpose of the National Disability Insurance Scheme Amendment (Streamlined Governance) Bill 2019 (the Bill) is to amend the National Disability Insurance Scheme Act 2013 (NDIS Act) to:

• introduce new requirements for appointments to the Board of the National Disability Insurance Agency (the Agency) and the Independent Advisory Council
• establish a 28 day requirement for consultation with host jurisdictions for certain matters and
• re-categorise some of the National Disability Insurance Scheme rules (NDIS rules) from
  Category A and Category C to Category D.

Background

About the National Disability Insurance Scheme

In 2009, the Productivity Commission was asked to ‘examine a range of options and approaches, including international examples, for the provision of long-term care and support for people with severe or profound disability’.[1]

The Productivity Commission report found:

The current disability support system is underfunded, unfair, fragmented, and inefficient, and gives people with a disability little choice and no certainty of access to appropriate supports. The stresses on the system are growing, with rising costs for all governments.[2]

Intergovernmental agreement

In response to the Productivity Commission’s report and recommendations, the Council of Australian Governments (COAG) signed an Intergovernmental Agreement for the NDIS Launch (Launch IGA) on 7 December 2012.[3]

The Launch IGA provides for, amongst other things, the establishment of the Ministerial Council, with effect from 1 January 2013.[4] 

NDIS launch

In 2013, the Commonwealth Government enacted the NDIS Act which:

• established the framework for the National Disability Insurance Scheme (NDIS) and the National Disability Insurance Scheme Launch Transition Agency (the Agency) and its Board. This enabled the NDIS to be launched, and the Agency to operate the launch, in five sites across Australia from July 2013
• set out the objects and principles under which the NDIS is to operate, including ensuring that people with disability are supported to exercise choice and control over the care and support they receive, and giving effect in part to the United Nations Convention on the Rights of Persons with Disabilities[5]
• set out the process for a person becoming a participant in the scheme, how participants develop a personal, goal-based plan with the Agency, and how reasonable and necessary supports will be assured to participants and
• provided that the Agency will be responsible for the provision of support to people with disability, their families and carers. This could include providing funding to individuals and organisations to help people with disability participate more fully in economic and social life.[6]

The states and territories subsequently signed bilateral agreements with the Commonwealth detailing the operational and funding arrangements for the NDIS in each trial site. These agreements included matters such as the planned intake of participants and the balance of cash and in-kind contributions to the scheme.[7]

The gradual roll out of the NDIS at specific sites in all states and territories has been ongoing since July 2013.[8]

NDIS full scheme roll out

Agreements for the full scheme roll out of the NDIS have been reached with New South Wales, Victoria, Queensland, South Australia, Tasmania, the Australian Capital Territory and the Northern Territory. A full scheme roll out in Western Australia has yet to be agreed.

The full scheme Heads of Agreement for each state and territory outline the parameters for transition to full scheme arrangements within specific timelines.[9]

Productivity Commission

The Productivity Commission (PC) published its study report into NDIS costs in October 2017.[10] At first instance, the PC considered the shared responsibility for governance of the NDIS by the Australian, State and Territory Governments:

The COAG Disability Reform Council (DRC) is responsible for NDIS policy and broader disability policy. Its members include the Ministers responsible for disability policy, the Treasury portfolio from each Australian, State and Territory Government, and a representative from the Australian Local Government Association.

The Australian Government Minister for Social Services is responsible for administering the NDIS Act. However, many of the Minister’s responsibilities require agreement from, or consultation with, State and Territory Governments prior to being undertaken. The Minister’s functions include making NDIS Rules and appointing Board and Independent Advisory Council members. The Minister can also issue directions to the NDIA [National Disability Insurance Agency] about the performance of its functions.[11]

According to the PC, some concerns were raised by study participants about the governance arrangements for changes to the NDIS Rules (citing submissions from both the Agency and the Department of Social Services (DSS)):

Both the NDIA and the DSS pointed to the length of time it can take to introduce or amend NDIS Rules. The process for amendment of the NDIS Rules requires agreement from a majority or all (depending on the rules) of the States and Territories. Recent experience of seeking amendments to rules is that the process takes considerable time ... This can delay the timely sign-off of amendments, and can potentially impact timely direction being provided to the NDIA.[12]

The PC was satisfied that the governance arrangements for the NDIS ‘provide a good foundation for delivering the scheme. However, improvements can be made’.[13] On balance the PC did not recommend that the requirement for agreeing to Category A NDIS Rules be changed from unanimous agreement (the different categories of NDIS Rules are explained under the ‘Key issues and provisions’ section below):

Instead, the process should be changed to encourage timely agreement to Rules without diluting the control of States and Territories. This could be done, for example, by requiring governments to state whether they agree or disagree to a proposed rule introduction or change within a certain amount of time. No response could be taken as agreement to the proposal.[14]

The amendments in the Bill respond to this recommendation.

Committee consideration

Senate Standing Committee on Community Affairs

The Bill was referred to the Senate Standing Committee on Community Affairs (the Committee) which reported on 6 September 2019.[15] The Committee received only five submissions and held hearings on 30 August 2019. Written and oral comments to the Committee are canvassed below.[16]

The Committee recommended that the Bill be passed, with both the Australian Labor Party and the Australian Greens issuing dissenting reports recommending that the Bill not proceed.

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills had no comment on the Bill.[17]

Policy position of non-government parties/independents

At the time of writing this Bills Digest no comments by non-government parties or by independent Senators and Members that directly reference the Bill have been identified.

Position of major interest groups

The common theme from submitters to the Committee was that the Bill should be postponed until the outcome of the review of the NDIS Act is known. That review was announced by the Minister for the National Disability Insurance Scheme, Stuart Robert, on 12 August 2019.[18]

For instance, People with Disability Australia (PWDA) expressed their concern about the timing of the Bill in the context of that review stating that the proposed changes ‘may be premature’, particularly when the Terms of Reference of the review include, amongst other things, ‘opportunities to amend the NDIS Act to remove process impediments and increase the efficiency of the Scheme’s administration’.[19]

Further, PWDA was concerned about the timing of the Bill because the Australian Government in association with the states and territories:

... is in the process of reviewing the overarching National Disability Strategy (NDS). This review will include the redevelopment of the inter-governmental agreement between the Commonwealth and States and Territories: the National Disability Agreement (NDA).[20]

Concerns around the timing of the Bill given the announced review of the NDIS Act were also expressed by the Young People in Nursing Homes National Alliance (YPiNH).[21]

Oral evidence to the Committee

Two key concerns emerged from disability stakeholders at the Committee’s public hearing.

The first concern was in relation to moving away from unanimous decision-making in some cases:

... we've got a federal disability support system and we've got state and territory mainstream service systems that implement a range of services that people with disabilities access. There is a continued need for an equitable partnership between the Commonwealth and the states in relation to the way in which the NDIS continues to be rolled out and the interaction with mainstream service systems. All the mainstream service systems are state based. Any move that shifts away from that equitable partnership arrangement would be of concern to the Australian Federation of Disability Organisations and its 17 member organisations, which represent different types of disability across Australia.[22] [emphasis added]

And further:

The advocacy organisations and the advocates on the ground every day are seeing people with disability all around the country who are stuck in significant problems in the interfaces between the NDIS and the states and territories' mainstream systems. Those are enormous blockages ... everybody is still attempting to cost-shift and they're not properly addressing the issues. Unless the governance is really taken seriously, and that shared responsibility is acknowledged properly by the state and territory governments, none of those things can be fixed. It is having a significantly damaging impact on people with disability every day.[23] [emphasis added]

Comments such as the above suggest that there is an underlying concern that states and territories might disengage from the NDIS, withdraw or underfund services and that the effect will be that the original intention of an Australia-wide scheme will be undermined.

The second concern, about the timing of the Bill, was summed up as follows:

It seems to be premature to do this before the review's looked at. The other thing I worry about is having the parliament tie this up and put this into the legislation, and then, if any changes are recommended, they would come back in a couple of months and say, ‘We need to change that’. We should be really careful about settling it too soon, particularly when we're still dealing with a piece of legislation that was designed for trial. It's actually not fit for purpose at the moment. Efficiency is a good thing and I think some of the timing things around decision-making are uncontroversial, but, as a whole package, I don't think this bill has a good mix of content or timing.[24]

Financial implications

According to the Explanatory Memorandum, the Bill will have nil financial impact over the forward estimates.[25]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[26]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considers that the Bill does not raise human rights concerns.[27]

Key issues and provisions

Consultation process under the NDIS Act

Various sections of the NDIS Act require the unanimous agreement of the Commonwealth and each host jurisdiction before certain actions may be taken.

According to Senator Jonathon Duniam:

Past experience of the requirement to obtain unanimous agreement from all states and territories has meant NDIS Rules, or amendment to Rules, which have agreement at the officials’ level, have taken up to ten months to be formally agreed before they could be registered.

Unnecessary delays in decision-making was recognised as a critical issue by the Productivity Commission in its 2017 Review of NDIS Costs. In the PC’s final report, handed down in October 2017, while acknowledging the complexity of shared governance arrangements and the valuable knowledge and expertise of all governments for designing and refining the Scheme, the PC concluded that "such timeframes for decision making could pose significant operational difficulties for the NDIA".[28]

The Bill amends the NDIS Act to insert a new process for consulting host jurisdictions and obtaining agreement on a range of matters.

Stakeholder comment

In its submission to the Committee, the YPiNH stated that it ‘does not support the continued characterisation of the States and Territories as host jurisdictions’.

The definition of a host jurisdiction was important in 2013 to establish the NDIS because not all jurisdictions were active during the trail. This description of a ‘host jurisdiction’ was appropriate in the context of the trial phase. However, six years on and now at full scheme, the term is no longer relevant.[29]

Key provisions

Currently, subsection 120(2) of the NDIS Act provides that the Minister may, by legislative instrument prescribe:

• the things that the Agency does in the performance of its functions for which it may charge fees and
• the amount, or a method of working out the amount, of those fees.

The Minister must not make such an instrument unless the Commonwealth and each host jurisdiction agrees to the making of the instrument.[30] That done, the Agency may charge fees in accordance with the terms of the instrument.

Item 2 of the Bill inserts proposed subsections 120(4A)–(4C) into the NDIS Act to set out the process for seeking agreement—referred to for the purposes of this Bills Digest as the standard agreement process.

First, the Minister must give a notice in writing (called the original notice) to one host jurisdiction Minister for each host jurisdiction[31] seeking the agreement of that host jurisdiction to the making of an instrument. The notice must request the agreement be given before the end of 28 days beginning on the day the notice is given. A copy of the proposed instrument must be given to that host jurisdiction Minister.[32]

Second, before the end of that 28‑day period, a host jurisdiction Minister may give a notice in writing to the Minister requesting a longer period within which to agree to the making of the instrument. In that case the host jurisdiction may agree to the making of the agreement at any time before the end of 90 days beginning on the day the original notice was given.[33]

If, immediately before the end of that 90‑day period, the host jurisdiction Minister has not informed the Minister that it agrees to the making of the instrument, then, at the end of that period, that host jurisdiction is taken to have agreed.[34]

Third, if before the end of that 28‑day period, no host jurisdiction Minister has requested an extension of time to agree (as set out above) or notified the Minister of its agreement to the making of the instrument, then at the end of the 28-day period the host jurisdiction is taken to have agreed.[35]

Item 1 of the Bill inserts the definition of host jurisdiction Minister into section 9 of the NDIS Act so that the host jurisdiction Minister for a host jurisdiction means a Minister of the host jurisdiction who is a member of the Ministerial Council. This is consistent with the Launch IGA.

The Bill also inserts the standard agreement process into the sections of the NDIS Act as set out in table 1 below.     

Table 1:  other equivalent changes

According to the Explanatory Memorandum to the Bill:

The 28 day process has been implemented administratively since it was agreed by the Council of Australian Government’s Disability Reform Council in November 2017, where all jurisdictions agreed to provide responses to requests for agreement within 28 days, with no response taken as agreement. The policy objective is to ensure the Minister is not precluded from making certain decisions and taking certain courses of action where host jurisdictions do not indicate their agreement (or otherwise) in a prompt manner.[36]

The requirement for unanimous agreement or agreement by majority is not changed by the Bill in respect of those sections. The Bill merely imposes a time limit within which agreement must be communicated. In the absence of such communication, agreement is implied.

Board and Advisory Council

The Agency is governed by a Board, which is responsible for setting the strategic direction of the Agency, managing risks and monitoring and reporting on the Agency’s performance. The Board is advised by the Independent Advisory Council (Advisory Council).[37]

Board of the Agency

Part 2 of Chapter 6 of the NDIS Act establishes the Board of the Agency. Relevant to this Bills Digest are the following requirements:

• the Minister must be satisfied before appointing a person to the Board that he, or she, has skills, experience or knowledge in at least one of the following:
  • the provision or use of disability services
  • the operation of insurance schemes, compensation schemes or schemes with long-term liabilities
  • financial management
  • corporate governance[38]
• in relation to the appointment of the Chair—the Minister must consult the states and territories[39]
• in relation to the appointment of a member other than the Chair—the Minister must both seek the support of all the states and territories for the appointment and be satisfied that the appointment is supported by the Commonwealth, states and territories.[40] However, if 90 days have passed since the Minister sought that support and it is not known whether support is given, the Minister may appoint the person as a member of the Board[41]
• the Minister may terminate the appointment of a Board member for misbehaviour if the member is incapable of performing the duties of his or her office or if the Minister does not have confidence in the member.[42] However, before the Minister terminates the appointment of a Board member other than the Chair, the Minister must seek the support of all the host jurisdictions for the termination and be satisfied that the termination is supported by the Commonwealth and a majority of the group consisting of the Commonwealth and the host jurisdictions[43] and
• the Minister determines the terms and conditions on which a Board member holds office in relation to matters not covered by the NDIS Act.[44] However, the Minister must be satisfied that the Commonwealth and a majority of host jurisdictions agree to these terms and conditions.[45]

Key provisions

Items 7, 8 and 10 of the Bill insert the standard agreement process terms into sections 127, 134 and 135 of the NDIS Act respectively. The effect of the amendments is to apply the same consultation time period to:

• the process for seeking agreement to appoint a Board member other than the Chair
• the process for seeking agreement to terminate the appointment of a Board member other than the Chair and
• the process for seeking agreement to the terms and conditions on which a Board member holds office in relation to matters not covered in the NDIS Act.

In addition, item 6 of the Bill removes the reference to ‘States and Territories’ in subsection 127 of the NDIS Act and substitutes a reference to host jurisdictions. This is consistent with the terminology used elsewhere in the NDIS Act.

Stakeholder comment

In its submission to the Committee, the YPiNH stated that it ‘does not support the amendment in subsection 127(4D)’ that provides for the Commonwealth Minister to appoint Board Members without a majority agreement from the states and territories:

Rather than tweaking the existing arrangement, it would be more prudent to wait for the outcome of the review of the NDIS Act and if a reformed governance arrangements is recommended, then a redesign of the agreement processed to operationalise this can then be undertaken.[46]

However, in oral evidence to the Committee, the Acting Group Manager, National Disability Insurance Scheme Transition Oversight, Department of Social Services stated:

... the balance here is between having good governance in place and the ability to ensure good governance is maintained through appointments, terminations and representation, and being able to do that in a timely fashion. The stakeholders in that are the governments, particularly the Commonwealth and the states and territories, and there appears to be a common view that these amendments strike an appropriate balance. It’s a balance that has proved difficult. The previous balance, which required unanimity, proved difficult in the past; in fact, the outcome of that is that we have a board that was not a product of a unanimous agreement. But, because of the way the act was set up, it took a long time to get there. There's a recognition that that’s not a good way to proceed, and what’s proposed is seen as a better way to proceed.[47]

Advisory Council

The Advisory Council is a panel of experts including people with disability, carers of people with disability, at least one person with expertise on disability in rural or remote areas, and at least one person with expertise in the supply of equipment or provision of disability services. The Advisory Council can provide advice to the Board about the way in which the Agency administers the NDIS and helps to meet the objectives of the NDIS Act.[48]

Part 3 of Chapter 6 of the NDIS Act establishes the Advisory Council to provide certain advice to the Board. Section 147 of the NDIS Act empowers the Minister, by written instrument, to appoint the members of the Advisory Council on a part-time basis.[49] The Minister must consult the states and territories about the appointment of the Principal Member.[50] In addition, section 155 of the NDIS Act allows the Minister to terminate the appointment of members of the Advisory Council in certain circumstances and section 156 allows the Minister to determine terms and conditions on which a member of the Advisory Council holds office.

The Minister must consult the host jurisdictions for the termination of a Principal Member[51] and seek support from the Commonwealth and a majority of the group of the Commonwealth and host jurisdictions for the termination of members other than a Principal Member.[52] In the case of determining terms and conditions, the Minister must be satisfied that a majority of the host jurisdictions and the Commonwealth agree with those terms and conditions.[53] The key provisions of the Bill (outlined below) amend these provisions to require only consultation with states and territories in all cases.

Key provisions

Item 11 of the Bill repeals existing subsections 147(2)–(3A) of the NDIS Act and inserts proposed subsection 147(2) which is a requirement that the Minister consult the host jurisdictions about the appointment of each member of the Advisory Council.

Similarly items 12 and 13 of the Bill repeal subsections 155(3) and (4) and subsection 156(2) of the NDIS Act and insert proposed subsections 155(3) and 156(2 ) to require the Minister to consult the host jurisdictions about the termination of an appointment to the Advisory Council and the terms and conditions upon which members are appointed.

Changes to NDIS Rules

Currently subsection 209(1) of the NDIS Act provides that the Minister may, by legislative instrument, make the NDIS rules prescribing matters that are required or permitted by the NDIS Act to be prescribed by the rules.

Categories of Rules

Subsections 209(4)–(7) of the NDIS Act set out four categories of NDIS Rules:

• the Minister must not make Category A rules unless the Commonwealth and each host jurisdiction have agreed to the making of those rules
• the Minister must not, unless the host jurisdiction has agreed, make Category B rules relating to:
  • an area, law or program of a host jurisdiction or
  • the commencement of the facilitation of the preparation of plans of participants who are identified by reference to a host jurisdiction
• the Minister must not make Category C rules unless the Commonwealth and a majority of host jurisdictions have agreed to the making of the rules
• the Minister must not make Category D rules unless each host jurisdiction has been consulted in relation to the making of the rules.

Key provisions

Items 19–23 of the Bill amend the table in subsection 209(8) of the NDIS Act so that:

• item 19 removes the reference to a rule made in accordance with section 66 as a Category A rule—this is because it is not a rule-making power and was incorrectly inserted into the table[54]
• items 19 and 23 move rules made under section 67 (about the CEO’s disclosure powers) from Category A to Category D and
• items 21 and 22 move rules made under section 45 (about the payment of NDIS amounts) from Category C to Category D.

According to the Explanatory Memorandum to the Bill, ‘these are all administrative matters between governments only and will not have any impact on access to the NDIS or participant plans’.[55]

In addition, item 24 of the Bill inserts the standard agreement process terms into section 209 of the NDIS Act by way of proposed subsections 209(8A)–(8C).