National Disability Insurance Scheme-Why Disability Reform is Needed Now1 I would like to acknowledge the traditional owners of the land on which we are meeting and pay my respects to their elders past and present. It is a great privilege to be here and I am very much looking forward to being part of this conference. Over the last two years I have addressed many audiences across Australia about a National Disability Insurance Scheme or NDIS. I have spoken to thousands of people. In turn, many people have told me about their personal experiences of disability, caring for someone with a disability or working in the disability sector. From my perspective, these personal stories have been enormously informative as they have enriched my understanding of disability and added to my thinking about how a NDIS should be designed. I am sure that gaining a better understanding of your individual and collective perspectives at this conference will be similarly informative and so I am particularly looking forward to the panel discussion at the conclusion of this presentation. Today, as I speak to people in the disability sector and the broader community it is clear that there is a desire for change. Transformational and urgent change. The political climate has changed too. Due to the courage and far-sightedness of Bill Shorten and Jenny Macklin a window of hope has opened. Such opportunities occur only rarely, perhaps only once in a lifetime and so, together, we need to grasp the opportunity to transform today’s possibilities into tomorrow’s reality. I can therefore think of no more important time to be addressing an audience of disability advocates. 1 Address to the Disability Advocacy Network Australia Conference, Canberra, 15-16 June, 2010 In preparing for this speech today, I wrote to my colleague on the Council of Philanthropy Australia, Jackie Huggins. Jackie was Chair of Reconciliation Australia for many years and is amongst Australia’s most respected Aboriginal leaders. I was grappling with the seeming contradiction between my aspirations for the rights of people with disabilities which often can only be realised in an accessible built environment and her advocacy, which I support, for the greater well-being of indigenous Australians, which is built on an attachment to the land in its natural forms through the dream time. I was therefore greatly encouraged when Jackie replied saying: ‘If a disabled person can not get across a muddy field in the wet season to go to school or hospital then it is an access issue and should be fixed. Same as you would expect with a whitefella.’2 Jackie’s response is as illuminating as it is clear. The right to a quality life should take precedence, cultures evolve and there must be some modifications to deal with modern lifestyles. She continues: ‘I fondly remember one of our very first discussions around Aboriginal people and disability Bruce when I told you that like the Stolen Generations, there would not be an Aboriginal person in this country who does not have a close relative with a disability and I told you of my brother. I would expect the same, decent, humane treatment for him despite his Aboriginality and disability and to enjoy the privileges that more able bodied persons enjoy every day of their lives.’3 I would add that every Australian knows a person with a disability or someone caring for a person with a disability and just as we need to ‘close the gap’ between indigenous and non indigenous Australians, we need to close the gap between people with disabilities and without disabilities 2 3 Jackie Huggins, personal communication, June, 2010 ibid 2 The UN Convention on the Rights of Persons with a Disabilities, to which Australia has been a signatory since 2008 and which I know many of you in this room fought hard and long to secure, provides a legal codification for closing the gap. State disability plans also aim to achieve equality and inclusion. Undoubtedly, these aspirations will also be part of the National Disability Strategy which is scheduled to be approved by the Council of Australian Governments shortly. However, these strategies, plans and rights remain illusive because the resources to secure them have never been provided. As a community we have never openly discussed nor agreed on the responsibilities of people with disabilities to help themselves; the responsibilities of families to provide informal care and support; the rights of people with disabilities and their carers to community support through government spending; or, how the balance of these rights and responsibilities should be shared given different disabilities. So who should be responsible for turning the vision embodied in the UN Convention into reality? Should it be left to governments? Is it part of some collective responsibility? When does collective responsibility become collective failure? When will a majority of Australians say stand up and be counted? Who will persuade them to act and what will be the winning arguments? The answers to these questions are in the hands of disability advocates and all those who aspire to a truly civic society in Australia. I am an economist by training and I began my professional career in the Australian Treasury in 1974, as a cadet. Since then I have been a keen participant, commentator and observer of economic policy. I have also spent more than 20 years working in funds management firms as subsidiaries of both insurance companies and banks. 3 I have also been involved in the philanthropic sector as a trustee for 10 years, which has taught me that in seeking to solve deep social problems it is essential to build fences at the top of the cliff, not provide more ambulances at the bottom. It was Brian Howe, the former Deputy Prime Minister, who sparked my interest in insurance approaches to disability about 4 years ago. It was while talking to him that it suddenly dawned on me that the sectors in which I had been working most of my life might have some relevance to the future of people with disabilities, including two of my sons. I know that some people, including some in this room, have expressed concern and sometimes outrage at the use of the term insurance and by extension risk in the context of disability. However, the language of insurance and risk does not automatically have to degenerate into the language of burden or become degrading or demeaning to people with a disability. It should be possible to talk about the risks of the incidence of disability as part of an actuarial approach without describing or implying that people with disability are themselves a risk. It should be possible to discuss the economic impact of disability both for individuals and for the nation without using language that reinforces negative perceptions of disability. It should be possible to recognise that disability can affect anyone at anytime and to reframe disability as an insurance issue, in order to make disability a matter of personal concern for every Australian, not just those with disabilities today. It should be possible to recognise that disability brings with it additional costs and those costs should be met by not just those with disabilities or their immediate families, but by all taxpayers through universal insurance. The situation is analogous to the usage and funding of intensive care units in public hospitals. Every taxpayer contributes willingly to the costs of building and staffing these facilities as a form of insurance payment, hoping never to need them. 4 My lived experience of disability covers 26 years, from the time my eldest son was born with cerebral palsy. My youngest son, who is now aged 19, also has cerebral palsy. As a family we have lived in Victoria, NSW and the United Kingdom and so have experienced very different disability service systems. I have also served on the boards of disability organisations for about one–half of these years. However, because my oldest son was born in 1984 and before his birth I knew little about disability, I was not part of the disability rights movement in the late 1970s and 1980s, which established the importance of disability as a social issue and rejected the medical model and the associated policies of segregation and institutionalisation. These were great steps forward, as was the International Year of Persons with a Disability. But looking back on these times and talking to many people who were active in the disability rights movement then, it is clear that the hopes and aspirations of that time have not been realised. It is important to understand why and so today I would like to share with you some thoughts based on my knowledge of the enormous economic changes that were occurring simultaneously. Paul Kelly, in his seminal study of these years, The End of Certainty, describes this period as the end of the Australian Settlement. The Australian Settlement was built on the Harvester Case, in the Commonwealth Arbitration and Arbitration Commission in 1907. In that year Justice Higgins set the first national wages standard, when he determined that the wage for unskilled labourers should be sufficient to allow them to feed, clothe and house a wife and two children. For the next 80 years this minimum wage applied to all industries and sectors irrespective of their profitability or productivity. Where industries could not compete with imports, tariffs and quotas were used to protect local industries. Over the years rates of protection rose as more industries became uncompetitive and labour and product markets became progressively less and less flexible. 5 In effect economic policy had become subsidiary to social policy and the minimum economic wage became a social wage. However, this social equality came at a very high cost in terms of total prosperity and the economy’s overall growth rate. In the face of low growth and high inflation, the Hawke Government began to deregulate the economy. The Australian dollar was floated, the financial system was opened to foreign competition, wage setting became less centralised and trade barriers were reduced. Directly as a result of these reforms, Australia began moving from the bottom of the OECD economic league tables towards the top, culminating in Australia’s extraordinary economic performance during the Global Financial Crisis, when Australia was the only OECD country not to go into recession. One of the consequences of these cataclysmic changes, which sharply distinguishes the policy environment today from the 1970s when the last great reforms in disability policy commenced, is that social policy is now either subsidiary to economic policy or at least must be embedded in an economic policy framework to cut through. If this analysis is correct, systemic disability advocacy must embrace an economic dimension, as well as social arguments, if it to be successful. If this does not occur, disability reform will remain at the margin of the main economic and hence political debates in Australia. It is in this context that I believe that the National Disability Insurance Scheme and the work of the Disability Investment Group are so important, because for the first time governments have been given a powerful economic case for disability reform. The Disability Investment Group (or DIG) was established by the Parliamentary Secretary for Disability Services, the Hon. Bill Shorten, in April 2008. It brought together a group of people with many years of deep and different experiences of disability, business, government, the non-profit sector and policy reform. 6 Since the report from the DIG, The Way Forward, was published most of the focus has been on its recommendation for a NDIS, but the report also includes several other path breaking recommendations. These include: a Three Pillar policy framework designed to allow a mix of public and private funding for disability, as occurs in education and health; a reframing of housing for people with disabilities so that it is part of the private or affordable housing markets , rather than the disability sector so that people with disabilities have control over their service provider; integration of the Disability Employment Network into the broader jobs market so that people with disabilities have an opportunity to apply for all jobs for which they are qualified, not just those earmarked for a person with a disability; and, a major boost to disability research, to build the evidence for more effective support for people with disabilities. Today, however, I would like to concentrate my remarks on the key recommendation in The Way Forward, for the current welfare and charity approach to disability to be replaced with a National Disability Insurance Scheme. A NDIS would provide essential services for people with disabilities and assistance for carers, based on their needs, including: support and therapy case management, brokerage services and advocacy to facilitate independence, maximise potential and plan transitions over the life course family support, including respite and support for carers early intervention to maximise long term outcomes aids, equipment, technology and home modifications on a timely basis, and training, development and access to work to build self-esteem and reduce long term costs. The Scheme would include people born with disability or who acquire disability through an accident or progressive medical condition and mental illness. The scheme would be person centred and so put people with disabilities and their families in control. 7 The costs of the scheme were calculated by PricewaterhouseCoopers (PwC) based on the incidence, life expectancy and likely severity of each type of disability and then embedding these lifetime costs of support in an insurance model. According to PwC the additional gross costs of a NDIS, over and above current government expenditures, would be equivalent to 0.4 to 0.8 per cent of taxable income. For people on average weekly earnings this equates to between $4 and $8 per week or 50 cents to $1 per day.4 The lower end of this cost range would be sufficient to meet the current unmet needs while the top of the range would be sufficient both to meet the current unmet needs and some future needs so that as Australia's population ages there would be no need for the levy to be increased. The net costs will be lower, because people with disabilities are over-represented in emergency hospital admissions, amongst the homeless and in the judicial system, as in many cases today they do not get the support they need. A NDIS could be expected to lead to very significant savings in these areas because of its additional tailored support to allow people with disabilities to live independently. Each year fewer than 3 per cent of people on the Disability Support Pension (DSP) come off the DSP without moving on to some other form of government income support. Over time, a NDIS, due to its focus on early intervention and access to education and work, could be expected to lead to much better employment outcomes. If it could increase the proportion of people coming off the DSP by one percentage point per annum for 10 years, a very conservative estimate, it would save close to $1 billion in the 10th year, thereby going a long way to offsetting the gross costs of a NDIS. Since The Way Forward was published some people have expressed concern that the DIG focussed only on people with profound or severe disabilities. However, this was done for definitional reasons, only, rather than as a reflection of a view that a NDIS should exclude people with less severe disabilities. Disability Investment Group, The Way Forward A New Disability Policy Framework for Australia, September 2009 4 8 The definitions of severe and profound include people who need assistance with daily living tasks such as eating, dressing and mobility. It therefore includes those people with disabilities that need support, which is the most costly aspect of any disability system. The focus on severe and profound was therefore a device to ensure that the estimated costs were robust and the scheme would be affordable. Certainly, I always expected that people with less severe disabilities should be include based on their lesser support needs. Let me now turn to the principles that underpinned the DIG recommendations, because it is the principles and their practical application which must shape future policy directions and so will lie at the centre of the analysis now being undertaken by the Productivity Commission. The recommendation for a NDIS in the DIG Report was based on four key principles: Equity Self determination Efficiency; and, Sustainability First, equity. While the UN Convention involves a paradigm shift in thinking from people with disability as objects of charity to citizens with rights, those rights do not guarantee resources. In economic terms, as well as social justice terms, the key principle is equity. In designing a new system for supporting people with disabilities there must be equity within the group of people with disabilities, between people with disabilities and without, and the costs of funding disability services must be shared equitably. A NDIS would ensure all people with a disability had access to services and support regardless of their specific disability or how or where they acquired their disability. This would be in stark contrast to the situation today where children with autism have 9 access to large early intervention packages but children with other disabilities do not. Some people have access to no-fault accident compensation schemes, a few more receive a lump-sum payout after years of draining litigation while the vast majority are forced to rely on family or friends or a complex service system that purports to ration services according to needs but is actually more akin to a lottery. But it is just not inequity between people with a disability. It is also inequity between people with a disability and the rest of the population which must underpin an NDIS. In 2008, the Federal Government undertook a Pension Review, which was chaired by Dr Jeff Harmer. It arose from deep concerns that people who were totally dependent on the single old age pension were living in abject poverty and that the treatment of couples and single pensioners was not equitable. When Dr. Harmer and his team investigated the adequacy of pension arrangements they discovered, that people on the Disability Support Pension were in fact, on average, poorer than single old age pensioners, because the costs of disability are so high and suggested that ‘an NDIS would be worthy of further consideration’. The other dimension to equity is how disability services in general and a NDIS specifically should be funded. Because disability can affect anyone at anytime, the most equitable way is based on capacity to pay and this would be most readily achieved by extending the Medicare levy to include disability. Commenting on the ageing of the population and disability, the Henry Tax Review notes: ‘…some additional forms of insurance might be appropriate to enhance national savings and help pre-fund community needs arising from ageing and disability… Ideally, it should be universal, applying to all taxpayers.’ The same point, with slightly different emphasis, is included in the Issues Paper from the Productivity Commission, where it is stated: 10 ‘There is a strong rationale for government to improve care and support arrangements for people with disabilities and their families. It is consistent with the desirability of sharing the costs that fall on people with disability and their families among a wider group of people—through a form of social insurance—and the low likelihood that private insurance markets would function equitably or efficiently in this area.’ Second, self determination. Today, the extent of individual packages or self directed funding varies dramatically from state to state. There is therefore an opportunity to institutionalise self determination, as a feature of a national scheme. A NDIS would shift power to people with disabilities. It would be person-centred; individualised; built around the choices of the person with a disability and their family; flexible; responsive; and, recognise the changing needs of a person with a disability over their lifetime. The DIG saw a NDIS as a critical opportunity to transform the way services are delivered and finally make sure people with disabilities and their families are placed at the heart of the disability system. It also favoured self determination as a means of driving innovation, providing individuals with value for money and cutting red tape. Individual utility, the market and choice are the best ways for people to maximise their well-being, recognising that in some cases people with disabilities will need support, through advocacy, in their decision making. Third, efficiency. In the current welfare model there are enormous pressures to reduce costs in the short term. As a result there is very little attention paid to long term outcomes. This is true for both people with a disability and their families. Only lip service is paid to early intervention for people with a disability, despite overwhelming evidence about the long term benefits. As a result, many become more disabled than they should or miss 11 out on opportunities. Carers are burnt out rather than nurtured and sustained in their roles. In total, governments are spending around $6 billion per annum on direct disability services, $1 billion on home and community care for people with disabilities, $12 billion on the Disability Support Pension and $2 billion on carer payment and carer allowance; a total in excess of $20 billion. This is a lot of money, but in terms of outcomes the results are poor. People with disabilities have two thirds the labour force participation rate of people without disabilities and twice the unemployment rate5. Many carers become disengaged from the labour force as a result of their responsibilities at home. Compared with the total population, the Australian Institute of Family Studies6 estimates that carers are twice as likely to be in poor physical health, twice as likely to experience financial stress and nearly one half of all carers have experienced a mental illness for six months or more since they became carers. Amongst carers who provide informal care full time and are in receipt of Carer Payment only 11 per cent work part-time. Then, in more than 50% of cases when they are no longer eligible for Carer Payment, they shift across to other forms of government income support, because either long term disengagement from the workforce or the onset of physical disabilities or mental illness due to their caring roles have made them unfit for work7. This is a huge cost to society. Dr Ken Henry in his review of Australia’s future tax system commented8: Australian Institute of Health and Welfare (AIHW), Disability in Australia: trends in prevalence, education, employment and community living, Bulletin 61, June 2008. In 2003, the latest year for which data is available, labour force participation rates for males and females with disabilities were 59.3% and 47.0%, which were approximately two-thirds the rates of participation for males and females without disabilities of 89.0% and 72.3% , respectively. In the same year the unemployment rate for people with disabilities was nearly twice the national average at 8.6%, compared with 5.0% for people without disabilities. 6 B Edwards, D J Higgins, M Gray, N Zmijewski and M Kingston, The Nature and Impact of Caring for Family Members with a Disability in Australia, 2008 7 In 2007/08 18,000 people ceased receipt of Carer Payment and 53% moved onto other forms of government income support 8 Australia’s Future Tax System 5 12 The current disability service system is fragmented, insufficient to meet current needs, difficult for people to access, and has no incentives to promote increased efficiency or effectiveness. This system will face considerable challenges in the future in meeting the demand for accommodation, care and respite services for people with a severe disability. In contrast, no-fault accident insurance schemes in Australia achieve much better outcomes through their focus on minimising lifetime costs and maximising lifetime opportunities. The lifetime insurance approach also creates a natural alignment of interests between the scheme management, people with disabilities and carers. Therefore while a National Disability Insurance Scheme would add to costs in the short term, as it would meet current unmet needs, it has the potential to significantly reduce costs in the long term. Finally, sustainability. There are a number of key dimensions to sustainability, including fiscal responsibility, inter-generational neutrality and a competitive market; all of which need to be placed in the context of on-going demographic and social trends. Over the last 30 to 40 years disability in Australia has been shaped by very powerful demographic and social forces. It is these inexorable forces that lie at the centre of the current policy failings. Over recent decades as the life expectancy of Australia's population as a whole has increased, the life expectancy of people with disabilities has increased even more significantly. Families, in general, are also having children later in life. As a result, people with disabilities are often outliving their parents, which was almost unheard of in previous generations. In addition, while the number of neonatal deaths has been declining for many years, as has the number of still-births, the number of children being born with disabilities has been rising slightly. Rates of acquired disabilities are also rising, due to foetal alcohol syndrome and alcohol fuelled violence. 13 At the same time as the rates of disability are increasing, the capacity of the community to provide informal care is declining. Families are smaller, women want and often need to work and rates of marital breakdown are increasing, especially amongst families with children with disabilities. As a result of these two trends, demand for government funded disability services is rising at 5 to 7% and government expenditures on disability will need to double in real terms in the next 15 years. Currently, Australia sets aside no funds to meet the future costs of care for people with disabilities. In contrast a NDIS would allow Australia to strike an appropriate balance of costs between current and future generations. This is termed intergenerational neutrality and is an important consideration in setting public policy. Governments around Australia therefore face a choice. They can continue to ignore the current demographic and social trends or they can develop a fiscally responsible approach by putting people with disabilities at the centre of a service system, replacing the current lottery with an equitable system, driving efficiency and facilitating a competitive marketplace. The importance of reform was recognised last November when the Prime Minister announced that he had he would be asking the Productivity Commission to undertake a review of a national long-term care and support scheme. At the time, he said that Bill Shorten’s description of a NDIS as a ‘big idea’ was ‘something of an understatement’9. Last month, the Leader of the Opposition, Tony Abbott added his support when he stated: ‘The Opposition strongly supports this [Productivity Commission] inquiry … There are millions of Australians who are involved with this, not because they necessarily have a disability themselves but because their loved ones do and 9 Hon Kevin Rudd, Address to the National Disability Awards Ceremony, 23 November, 2009 14 they are rightly, rightly, very interested in the outcome of this Productivity Commission inquiry and we won’t let them down.’10 However, while bipartisan support for the Productivity Commission Inquiry is clearly pleasing, the gap between supporting the detailed analysis of a big idea, and supporting the implementation of major reform based on that big idea, is huge. To ensure that transformational disability reform becomes a reality, I believe there are three immediate and critical advocacy goals, which should be supported by every advocacy group, disability organisation, person with a disability, family, carer and care worker. First, the Productivity Commission is an extremely capable organisation, whose very reason for existence is reform. Its inquiry is now well underway, with the publication of an Issues Paper last month and the commencement of public hearings this month. However, the Productivity Commission is relying on the knowledge, experience and evidence from the disability sector on which to build and test its recommendations . It is therefore vital that it hears from every person with a disability and every organisation with ideas and advice to contribute. As part of this process it is essential that new perspectives emerge An example is a recent landmark speech by Graeme Innes, the Disability Discrimination Commissioner, to the National Disability Summit. In discussing the possible merits of an NDIS, he reminded his audience that insurance companies had played a key role in the establishment of fire brigades in many communities and led improvements in building regulations to make buildings less hazardous in the event of fire. He then added, initially quoting Clint Eastwood: “A man alone is easy prey.” But a person whose cause is represented by an organisation, or a statutory authority—or perhaps an insurer with an interest in favourable and efficient resolution of the matter—is not a man, or woman, alone anymore. 10 Hon Tony Abbott, Joint Doorstop Interview, 10 May, 2010 15 There is more to a social insurance scheme than payments to insured individuals. As well as paying benefits to individuals, insurers do all sorts of things to manage risk. And these things as it happens look very similar to many of the major mechanisms for social change provided in the obligations in DisCo [the UN Convention on Rights of Persons with Disabilities]. Second, unity within the disability sector around a common claim is essential, because in the absence of unity governments will continue to largely ignore the needs of people with disability. In stressing the importance of unity, I understand that this suggestion could be misinterpreted. Unity is not about one perspective dominating and all others becoming subservient. It is not about trying to pretend there are no differences or simply papering over cracks. But it is about coming together in a spirit of cooperation identifying common concerns and working constructively together to achieve a shared vision. To draw an analogy with a piece of music that is played by one instrument versus an orchestra; the orchestral version is much more complete. Not every one is playing the same note at the same time, but there is harmony and much greater impact. The potential for unity to be the trigger for reform is already clear from the work of the National Disability and Carer Alliance, which brings together the Australian Federation of Disability Organisations, Carers Australia and National Disability Services and represents the first time that the three arms of the sector have formed a joint organisation. I would particularly like to acknowledge Lesley Hall and Rhonda Galbally for their leadership in bringing the Alliance together. However, in building further momentum for reform it is now necessary to strengthen the Alliance by reaching deep into the disability sector to engage all stakeholders as reform champions. For many I understand that this will require forgiving injustices of the past. 16 The thirteenth century Persian theologian and philosopher Rumi summarised this choice beautifully, when he said: ‘Out beyond ideas of wrong-doing and right-doing there is a field. I will meet you there.’ The disability sector could also draw inspiration from Nelson Mandela, who was imprisoned for 27 years. For most of that time he was allowed only one visitor and one letter every six months, yet following his release from prison, he chose to forgive, forget and move forward. He explained his motivation and aspirations in Long Walk to Freedom, writing: ‘I told white audiences that we needed them and did not want them to leave the country. They were South Africans just like ourselves and this was there land, too. I would not mince words about the horrors of apartheid, but I said over and over, that we should forget the past and concentrate on building a better future together.’11 Certainly, service providers are committed to working with people with disabilities, their families and carers, because all non profit disability service providers have been established for one purpose only: to improve the lives of people with disability. They accept that self determination by people with disabilities and not service providers must be at the centre of a new paradigm; there must be choice; and, competition and new service provider strategies based on value for money, contestability, and innovation will be required. Yooralla and many other service providers have therefore decided to commit funds and resources to promote disability reform and to work with people with disabilities, their families and carers in order to grasp the current extraordinary opportunity for reform. 11 Nelson Mandela, Long Walk to Freedom, pp736-7 17 Third, in the context of the forthcoming Federal election, there is a need for the strongest possible advocacy to ensure that all parties commit now to fundamental transformational reform of the disability sector in the next parliamentary term. This reform commitment should be based on the principles of equity, self determination, efficiency and sustainability. Not to do so given the current and prospective demographic and social trends I have described would be economically, socially and morally irresponsible. This should therefore be a key advocacy goal in the months immediately ahead. In closing, I would like to thank you again for the opportunity to speak today. It has been a great privilege to be asked to give a plenary speech to your conference and I wish you well in your vital roles as disability advocates. The road ahead, like all great reform paths, will undoubtedly be full of twists and turns, but I am confident that with shared purpose and resolve we can together build a new chapter in the history of disability reform in this country. Personally, I am very much looking forward to working with you and I am hopeful that in time millions of Australians will join us in the field that Rumi has described so beautifully—out beyond ideas of past rights and wrongs-creating a National Disability Insurance Scheme that will truly serve the needs of all Australians in the 21st century. Thank you very much. Bruce Bonyhady Chairman, Yooralla 15 June, 2010 18