Funding growth of disability services by State and Territory governments has slowed and funding per disability employment service user is falling. At a time when the need for disability services is rising and the cost of providing services is increasing, these are concerning trends.
According to the Productivity Commission's 'Report on Government Services 2012', State and Territory governments around Australia increased their funding of disability services, on average, by only 1.3% (in real terms) in 2010-11. This contrasts with the previous year in which expenditure grew by 8%. The growth rate varies among States, with Queensland experiencing the largest fall.
Australian Government expenditure on the services it funds directly increased by 2.5%.
Overall, governments increased their total real expenditure on disability services from $6.1 billion in 2009-10 to $6.2 billion in 2010-11.
Tight fiscal circumstances go some way towards explaining the significant slow-down of expenditure growth. But some governments may also be taking their foot off the accelerator because they see a National Disability Insurance Scheme (NDIS) approaching. If so, they are being short-sighted.
The Australian Government announced the inquiry into long-term disability care and support in late 2009 and the Productivity Commission delivered its Final Report to the Government in July 2011. The Final Report recognises that funding needs to grow significantly during the development of the NDIS to avoid escalating the cost of the new system.
The Productivity Commission's Final Report recommends that the Australian Government fund the entire cost of the NDIS through a legislated formula which draws from consolidated revenue. It recommends that the Australian Government ceases making special purpose payments to the States and Territories through the National Disability Agreement and that it negotiates an arrangement with the States and Territories which requires them to reduce their taxes or (more likely) to transfer their existing spending commitment to the Australian Government (for allocation to the National Disability Insurance Premium Fund).
Funding negotiations between levels of government are notoriously difficult and governments will haggle over where to set a benchmark for their 'existing spending commitment', particularly given the marked disparity across States and Territories in relative per capita funding levels. Lower spending States and Territories are looking to the Commonwealth to relieve them of the need to spend more and higher spending jurisdictions are concerned that an arrangement which locks in 'existing spending commitments' won't be equitable.
Against the disturbing slow-down in funding growth, there is evidence that unmet need for support services is increasing. The 2009 ABS Survey of Disability Ageing and Carers shows a decline in the proportion of people with severe or profound disability who received help compared to the previous Survey in 2003. The fall is apparent across the full range of supports, from self-care, mobility and communication to transport and cognitive or emotional support. For example, in 2003, 91% of people 0-64 years who needed help with self-care reported receiving help; in 2009 this had dropped to 85%. In 2003, 95% received help with mobility; in 2009 this had fallen to 89%.
There are other signs that growth in the service system is failing to keep pace with need. For every 100 Australians aged under 65 years with a severe or profound disability, fewer than 5 have access to any form of specialist disability accommodation support. In the two most recent reported years (2009 and 2010), this figure rose hardly at all, from 4.7 persons to 4.8. While this slight growth represents an additional 1,072 accommodation service users across Australia, the potential service user population of people with severe and profound disability swelled by more than 12,400 in the same year.
The growth rate in community access (day) services is similarly lethargic. Between 2009 and 2010, service users as a proportion of the potential population grew from 7.2% to 7.3% Australia-wide. Access to respite services rose slightly more, from 8.8% to 9.0%.
In this tight funding environment, service providers are being expected to do more with less. Real funding per disability employment service user is falling. Government funding per open employment service user was $4,545 in 2009-10; $4,593 the year before; and $4,759 in 2007-08. This decline in real funding would matter less if the compliance burden were light; but not even the Government would claim that this is so. It has recently established a review to reduce "unnecessary administration" of employment services.
The RFT Exposure Draft for Employment Support Services released for comment in February indicates, unfortunately, that the Government has no intention of increasing fee levels before 2015. This will ensure that real funding per service user continues to fall.
Lifting Disability Employment Service fee levels to keep pace with the rising cost of service delivery was a key recommendation in NDS's 2012 Federal Budget submission (PDF 622KB, RTF 311KB). The new figures published in the Productivity Commission's 'Report on Government Services 2012' strengthen the case for this recommendation.
Australian Disability Enterprises are also being squeezed. Real funding per supported employee fell from $10,147 in 2007-08 to $9,352 in 2009-10. NDS's Federal Budget submission also sets out a strong case for realistic indexation of ADE funding.
The ADE sector will be consulted shortly on the recommendations of last year's funding review (which KPMG undertook for FaHCSIA). Feedback from ADEs is essential before any decisions about a new funding model are made; and any new model needs to be built on a larger funding base.
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