13. Stronger Together and the Birth of the NDIS

Author: Matthew Richardson and Patrick Keyzer

Instructions for setting up the Government of New South Wales, carried on the First Fleet by Governor Arthur Phillip in 1787, included an obligation to take charge of ‘ideots, lunaticks and their estates’.

As viceroy, the Governor was responsible for the wellbeing of all the King’s subjects in New South Wales, including those with disabilities. But by this specific provision he was granted custodial power over individuals with intellectual disabilities and mental ill health: the beginning of a funding and service provision role the NSW Government maintained for more than two centuries. The Government also assisted people with physical and sensory disabilities, but they mostly lived in the community and relied on non-government service providers.

Of course by the time the First Fleet arrived, countless generations of Aboriginal people had already lived with disabilities in what is now called New South Wales. It would be illuminating to know about how they managed, but materials are lacking. Skillful observers in colonial times (such as R. H. Mathews, who spent time with Aboriginal communities) could only examine them after the impact of deadly pressure from European settlers and diseases.

Scholars today look cautiously to bio-archaeology and language analysis to reconstruct the past. Aboriginal communities were small and frequently on the move, facilities were few, and the fortunes of a day often determined whether bare essentials would be available; it’s unlikely that people incapacitated by disabilities lived as long as they can now.

Anthropologists used to speculate that those who couldn’t contribute to survival must have been cast aside. However, Prof Scott Avery from First Peoples Disability Network points to archaeological evidence of support for group members requiring assistance. In a 2015 dissertation, Subahari Ravindran asserted that a strong obligation to share responsibility as caretakers in extended family networks was a common feature of ‘cultural protocols in Indigenous communities’.¹

Rural surgeon Louis Ariotti reached a similar conclusion, and argued that before colonisation, people with disabilities were involved in their communities with assistance from extended families. His study of languages in Anangu lands (where Western Australia, South Australia and the Northern Territory meet) points to the conceptual differences between cultures. He found words for specific impairments. There were ‘blind people and lame people and slow people, but “the disabled” as a general term… [did] not translate easily’.²

It’s misleading to assume that Aboriginal societies were all alike; however, Professor John Gilroy, building on Ariotti’s work, found that communities in New South Wales also used a diversity of words and phrases that identify specific disabilities, not aligning exactly with conceptions commonly expressed in English.³

Community solutions to caring for those in need began in distant antiquity. Institutional solutions only developed in New South Wales as the colonial population grew. In 1811, the Castle Hill Asylum became Australia’s first institution specifically for residents with disabilities. Disability services were thus an established component in the budget when NSW Treasury was founded in 1824. The following year, a remodelled former courthouse at Liverpool replaced the Castle Hill facility. In 1838 it was replaced by Tarban Creek Lunatic Asylum: the colony’s first purpose-built facility, run by a trained superintendent, Thomas Digby.

Struggling with growing demand, overcrowding and understaffing, Digby repeatedly appealed for increased funding. When word got out about bad conditions for residents, official inquiries followed – and so did negative press coverage. It was a pattern that would occur in New South Wales again and again until recent times. Consequences of underfunding often went unnoticed – as did mistreatment by unscrupulous staff. Eventually, abuses would come to light; they would provoke outrage in the press and inquiries by the authorities, sometimes improvements and extra funding, but rarely a lasting solution.

The late 20th century brought conceptual changes. While mental health and intellectual disability continued to dominate the spending impetus, people whose disabilities were only physical or sensory, (and their supporters) had demonstrated all along that they could live in the general community and benefit from the freedom to control their own lives. Now, those opportunities are officially recognised as the right of every recipient of disability services. Policy in New South Wales followed Australian Government initiatives, responding in turn to United Nations instruments specifying rights and entitlements of people with disabilities.

Australia’s commitment to the UN position was enshrined in the Disability Services Act 1986 (Cth). Its sequel, the Disability Services Act 1993 (NSW), obligated the State to realise those rights and deal with complaints. According to Tony Pooley, who worked for four NSW disability services ministers, the 1993 Act ‘was the start of that concept that people with disabilities should be afforded the rights and privileges afforded to the general community'.

In 2001, the State Government formed the Department of Ageing, Disability and Home Care (DADHC), to take charge of its new Disability Action Plan. It heralded a determination that the ‘person-centred’ approach would be realised: people with their own money would make their own choices.

Yet the 21st century opened on bleak terrain for thousands of people in New South Wales not sharing in the dignity, opportunity and freedoms they’d been promised.

The Legislative Council’s Standing Committee on Social Issues found in 2000 that the State’s large residential centres weren’t complying with the Disability Services Act. Nearly 2,000 lived there with minimal privacy and no opportunity to make life choices.

In certain boarding houses, victims of exploitation endured neglect in appalling conditions, despite high profile exposés through the 1990s. When the program to move people with disabilities to better accommodation ran out of funds in 2002, many remained in dirty, understaffed premises, inadequately fed and rarely given medical attention.

Hundreds of young and middle-aged residents were sentenced by disabilities to live out their days in aged care facilities.

In prisons and youth detention centres, inmates with disabilities paid with their liberty for their incapacity in the face of the law. A penal system not designed to deal with their challenges condemned them to lives in and out of police stations and jails.

For the Aboriginal population, many of whom were understandably mistrustful of administrative intervention, there were few specialised resources and few personnel with the cultural sensitivity to help in the proper way.

In the bush, and in towns and suburbs, countless people in need went almost unrecognised, struggling to make ordinary lives with little or no specialist support.

Successful trials had established the benefits of person-centred planning, of engagement in the community, of early intervention and of schemes to enable independent living and respite care services. These successes showed how much could be achieved, at the very time when the numbers missing out were greater than ever – and growing.

When limited funds were allocated to address disparities, the backlog prevented progress. For example, of one-off funding for Supported Accommodation in 2003, about 80 per cent went to crisis management, leaving little for long-term solutions. Advocacy efforts had to be wasted in competitive bids to secure overstretched services and supports for individuals and families in need. Respite facilities were hopelessly overloaded, even though the link had been demonstrated between the availability of respite care and the long-term capacity of family members to keep on caring – at a lower cost to the taxpayer than professional service providers.

The State Government was not responding financially to opportunities that required large outlays. Economics lagged behind, while people with disabilities and their families paid the increasing price. The challenge was so large that progress would depend on people with determination, competence and vision at every level, from number crunchers to premiers. Fortunately, at this critical juncture influential individuals came forward with long-term remedies.

Brendan O’Reilly, appointed as Director-General of DADHC in 2004, quickly made it apparent that he wouldn’t be carrying on with things as they’d been. He had the support of Jim Moore (who would become Director-General of the Department of Family and Community Services in 2011), who masterminded strategies for reaching their view for the future. But the gap between promise and delivery couldn’t be closed just by sound administration. Success depended on recognition at Cabinet level of the need for a massive commitment.

Every State ministry looks out on a plenteous array of outstretched hands of farsighted people with urgent spending proposals. One task of Treasury is shepherding limited money supplies, coupled unavoidably with spreading disappointment. To attract a bigger share of the budget, disability would need more than just a strong case.

But disability policy rarely took space on the front page, and neither side in State politics had promised an overhaul. Something else made expensive reform politically attractive: a rare instance of representative democracy working the way 19th century theorists said it would. MPs throughout the state were wasting time and energy applying to agencies on behalf of needy constituents. Repeatedly they shared frustrations as they discovered how little they could achieve from the under funded disability system.

Ambitious politicians could expect party room support for spending on a problem that exasperated so many members. In 2005, two powerful MPs who really cared were in positions where they could do something. Ageing and Disability Minister John Della Bosca was also Commerce Minister. He introduced a crucial participant from outside government, John Walsh: an actuary with accounting firm PricewaterhouseCoopers (PwC). Della Bosca arranged for him to examine the state demographically, applying actuarial processes to ascertain the funding demands services were going to face.

His findings had the credibility to satisfy Treasury of the need to make copious provision. The inescapable conclusion was that demand would keep escalating – faster than economic growth. Society was changing and the proportion of the population in need would keep increasing.

Governments which didn’t address disability with sharp increases in funding would face increased burdens elsewhere: education, health, prisons, and the emergency services.

The retirement of Premier Bob Carr brought the other crucial political figure onto centre stage. Premier Morris Iemma was sworn in during August 2005. His focus was on social concerns, as Jim Moore remembers: ‘Iemma from hour one was concerned with mental health, disability and social housing… It came as a shock to us that disability mattered so much to him.’

The call for a massive increase in disability spending reached Treasury during John Pierce’s term as Secretary (1997–2008), while its Director of Human Services (including disability services) was Kate Lawrence-Haynes.

It came as no surprise. Year on year, they’d found interim disbursements necessary to prevent State agencies running out of money. The looming crisis in disability funding had been discussed by officers of Treasury, and John Pierce had been making a concentrated study of demographic changes, anticipating their effect on long-term spending demand. With the population ageing, incidence of disability increasing, and households shrinking, it was evident even before modelling that expenditure on human services would escalate.

Treasury reacts to policy initiatives from Cabinet and other departments; but in 2005, its deft manoeuvring was a natural consequence of its own vision.

The Premier’s perspective translated concerns about disability into a high priority for spending. By the end of 2005, the groundwork was done for his forthcoming announcement of the radical new package, commencing in 2006 under the label ‘Stronger Together’.

In New South Wales, as other chapters of this book make clear, Treasury plays an active role well beyond its bookkeeping duties. Some critics may have Treasury in mind when they lament that bureaucracy doesn’t respond with the agility circumstances require. Whether or not that’s sometimes true, in this case Treasury responded with sensitivity and alacrity. It’s noteworthy that what was done needed, and got, swiftly synchronised action by Cabinet ministers, Treasury officers and other departments.

One of DADHC’s policy officers at the time happened to be Jeff Nelson. In his present position with Treasury, as Associate Director, Policy, he has completed the Aboriginal Procurement Policy Review among other projects to improve the department’s work with Aboriginal people. Back when Stronger Together was being developed, it troubled him that he couldn’t provide data to O’Reilly and Della Bosca about levels of disability in the Aboriginal population (estimated at about four times the community average).

Controversially, he introduced a procedure requiring NSW Health to identify Aboriginal people as Aboriginal in the record of each presentation for services. His team, including John Gilroy and Susan Parker, was able to work up statistical computations and prepare data that would guide service provision. He masterminded DADHC’s Aboriginal Policy Framework, the beginning of improved understanding in extension of disability services to Aboriginal people.

‘Stronger Together, A New Direction for Disability Services in NSW: 2006–2016’ was a 10- year plan, but expenditure was only spelled out for five years to 2011: $1.38 billion (at 2006-2007 financial year value). The Government undertook to increase the capacity of disability services by 40 per cent.

The sense of urgency that brought on Stronger Together carried over into the way money was spread around after it started to come through from Treasury. Had it all followed the traditional conduit through head office decision-making processes, it would have taken too long before benefits were felt. Instead, DADHC’s regional administrations suddenly found themselves in charge of large sums, with instructions to distribute them quickly, using their own judgement as to where they would soonest make a difference.

State agencies didn’t have the operational capacity to apply funds quickly enough. Managers were told to disburse money to service providers for immediate frontline use. Some was spent directly by government, but more than twice as much went to non-government organisations.

For decades, Australian governments had been increasing reliance on the private sector. Escalation of non-government service provision stimulated by Stronger Together seemed consistent with that tendency. However some important distinctions make the disability sector unique. Elsewhere the shift from public to private was motivated by convictions or favouritism: favouritism where the empathy of decision-makers lay with private sector interests that would gain by deregulation and withdrawal of government; ideological conviction where the motivation was what is sometimes called neo-liberalism, or economic fundamentalism, embracing the principle that greatest advantage is achieved by freeing private interests to compete for opportunities to maximise profits.

Neither of those motives seems to have influenced Treasury in releasing funds for disability spending. Non-government disability service providers have mostly been non-profit organisations: charities, educational organisations, branches of religious denominations and community groups. Indeed there was a move away from businesses trading for gain in the most profitable area: boarding house accommodation.

One of the many who noticed was Annette Rowette, who was a DADHC case manager before Stronger Together started. ‘We had no money,’ she said:

Even activists were impressed. Jim Simpson – a veteran of leading roles in advocacy organisations – commented that ‘the really big leap forward was Stronger Together, thanks to John Della Bosca. We had a system in constant crisis til Stronger Together’. When it rains after drought, the grass turns green, cracks in the parched earth close up, dying plants begin to flourish. But with the water all soaked up by the thirsty soil, the dams and creeks don’t fill. With disability funding there was so much catching up to do that most of the money was soaked up putting things right. Ambitions for progress were stimulated by the announcement and reality of copious spending.

But by 2010, it was obvious that with just the resources which had been announced, many hopes would be disappointed. ‘We probably thought we’d get more funding,’ says Kathryn Burgess, who was coordinating a staff of case managers at the time:

Within Treasury, shortfalls which became visible to the disability sector in 2010 had been foreseen years earlier. While Philip Mussared was a Deputy Secretary, concentrated planning mapped out the spending measures required to forestall them.

In 2005, the Fiscal Responsibility Act 2005 took effect, requiring expenditure management on a long-term basis. One of Treasury’s responses is intergenerational reports issued at five-year intervals. The first, in 2006, looked ahead 40 years and identified demand for disability services.

Long-term projections and forecasting mandated by the legislation utilised capabilities Treasury was used to anyway. A more fundamental step is a long-term approach to fixing budgetary allocations. That proved successful last century, when spending on school education was laid down. It’s not a set-and-forget model: forecasts are constantly reviewed, and corrections routinely made. However, the long-term approach is a crucial counter to the electoral cycle, so often responsible for misallocation of funds by Australian governments.

Treasury was working on application of the long-term approach to funding health and justice, when planning for Stronger Together brought a concentration of staff resources to the disability area.

An important early step towards extending plans beyond 2011 was the 2006-2007 period Long-Term Fiscal Pressures Report, which embodies fiscal modelling done by Treasury. Complex modelling can easily take 12 months, and this report was built on data collected before the Stronger Together transformation.

Later Treasury tested updated modelling from John Walsh in its review of the business case for ‘Stronger Together 2’, led by Rick Sondalini. He and Treasury colleagues met with ministers and representatives of other departments, including Jim Moore, ahead of the determination of funding for Stronger Together 2 by the State’s Expenditure Review Committee.

The relative shrinkage in carer numbers since the 1950s is one of the factors that commanded attention. Governments were attracted to savings in expense by increasingly getting families to look after their own, rather than funding residential care. Over generations, as the size of families decreased, reliance on that became unsustainable. Women were spending longer in the workplace before having children, so the age of parents rose, while improvements in treatment meant that increasingly people with profound disabilities would outlive their parents.

If it were ever realistic to plan on an assumption of steady growth and social progress, those days were long-gone for state treasuries. Complex interaction of negative and positive changes had to be anticipated.

By 2010, facts were bearing out John Walsh’s forecasts, but the Labor Government no longer looked forward to the future, as it had when Stronger Together was announced. Backroom powerbrokers seemed to be running the parliamentary party for personal motives. Voters were angry, and almost no one believed Premier Kristina Keneally would still be in office after the 2011 election. Ensuring that the election wouldn’t be a disastrous loss for people with disabilities meant talking to the Coalition.

Patrick Maher, Chief Operating Officer at National Disability Services (NDS), the peak representative body, put a case to Shadow Minister for Disability Andrew Constance: to carry on Labor’s commitments, and increase spending.

Constance was preparing to campaign against Labor. But as a disability advocate, he saw what the old government achieved, and didn’t mind identifying with objectives articulated by his opponents.

‘I offered our bipartisan support for that initiative,’ he said of Stronger Together. ‘We almost saw a collapse in state-based systems of disability support. It wasn’t until John Della Bosca that Stronger Together really started delivering the resources people needed.’

A shadow disability minister doesn’t hold the purse strings. There was still a risk that conditions would deteriorate, unless advocates obtained spending promises that weren’t easy to withdraw.

They found a crucial ally in Premier Keneally. In the 2007-2008 period, she’d succeeded Della Bosca as Minister for Disability Services. She understood the looming challenge of Stronger Together 2. Even as things seemed to be falling apart for her government, she undertook to use her position to help secure the future for people with disabilities.

Patrick Maher and his associates organised a rally in Sydney in October 2010. Thousands gathered at the Opera House steps where political leaders waited on a dais, while radio commentator Alan Jones acted as MC.

By this time Treasury had completed its funding assessments for the next phase. Andrew Constance had secured the attendance of the Opposition Leader, Barry O’Farrell, who was tipped to be the next premier. After the ambitious plans had been outlined, Premier Kenneally came to the microphone. She announced Labor’s undertaking to implement the plans, provided the Leader of the Opposition would give the same commitment.

As Mr O’Farrell came forward, Treasury officers weren’t sure what he would say. Politicians sometimes avoid expensive commitments with vaguely positive wording. Instead he welcomed the Premier’s invitation to commit a Coalition Government to the same extent as she’d undertaken.

For the disability sector, the day went perfectly, and events followed as predicted. In December, the Government announced $2 billion for the second five-year period. In March 2011, after more than 16 years in opposition, the Liberal-National Coalition led by Barry O’Farrell won the NSW State Election with a record majority. In the lower house, Labor was reduced to a small band of survivors – but its disability policy was carried on without compromise.

In the second half of 2011, the increased funding flowed through. The dams filled and the creeks ran; it put New South Wales out in front as a model for the rest, barely six years after being an example of privation.

But it was clear to Treasury from assessing Stronger Together 2 and preparing fiscal pressures reports that New South Wales didn’t have an adequate revenue base to go on escalating funding at the rate at which disability proliferates. It assisted the government to take steps towards an agreement for handover of State responsibilities to the Commonwealth.

Discussions began in 2007 between delegates from Sydney and Canberra. While Caralee McLiesh and Kevin Cosgriff were Deputy Secretaries, Treasury representatives advised the Premier, Treasurer and ministers negotiating the changeover to the NDIS. The agenda and supporting papers became increasingly detailed in following years.New South Wales had Australia’s largest disability services budget. It went to Canberra armed with careful modelling and had taken a national lead in design of individualised funding based on person-centred planning. It was well-placed to be taken seriously at national level.

In 1948, the Mental Institution Benefits Act 1948 (Cth) got individualised funding off to a false start. It authorised federal-state agreements for payment of allowances to residents of mental institutions. Although some states signed up, in the upshot they all preferred to receive direct payments for upgrading works.

Precedents overseas go back earlier still. In Egypt in the 3rd century BCE, the government introduced and subsidised an insurance scheme to fund upkeep and treatment of people who couldn’t work. Income earners had to contribute except when receiving support.

The insurance scheme concept is crucial in recent evolution of social welfare. Instead of payments to service providers or pensions calculated by a standard formula, it guarantees a minimum standard of support by payments to individuals in need. The Whitlam Government adopted this principle in the 1970s for ‘Medibank’, later modified to become ‘Medicare’.

In 2008 NDS committed to the concept of a national disability insurance scheme.

Service providers were accustomed to direct grants, so it was an achievement when, in 2010 (along with governments and consumers), they joined the call for a future in which organisations competing for the custom of people in need would provide human services; in which public funds are paid to consumers and in which the money isn’t a portion of the State Budget, earmarked by Treasury to new initiatives and five-year plans, but comes from Canberra in an open ended stream, according to individual need.

It was a vision shared by Treasury planners, and meant that Stronger Together 2 would be the last great outlay of New South Wales on its own for people with disabilities.

The State Government ran consultations to ready the disability sector for the new approach, and launched programs delivered by non-government organisations, to widen opportunities for consumers. For example the Independent Living Support Initiative focused on people with ageing parents, aiming to develop person-centred lifestyle plans and wider circles of carers to secure their future independence.

Working as a policy advisor, Nell Brown helped write ‘Personalising Service Delivery’ in 2010:

In 1974, Prime Minister Whitlam had taken the Parliament of Australia to a double dissolution, provoked by the Opposition’s use of its Senate majority to block six bills which had passed the House of Representatives. Double dissolution is a rarely invoked procedure to resolve deadlock by a joint sitting of the two houses. Five bills passed into law through the joint sitting, but the sixth was shelved for the time being.

That sixth item, the ‘National Compensation Scheme’, had features in common with today’s NDIS. It gathered dust as governments came and went. Then suddenly, in the federal arena as at the state level, progress was expedited by bilateral support and influential participants. One of them was an ambitious young Parliamentary Secretary for Disability and Children’s Services, Bill Shorten. He viewed a disability insurance scheme as unfinished business of the Whitlam government. He prepared a National Disability Strategy for a scheme of Commonwealth payments to people in need. By 2009, the Rudd Government had promised $5 billion towards it.

The Strategy would need promotion to win over the public and the disability sector. It would need detail to yield a workable scheme. Because the Commonwealth did not have a disability power enumerated in the Constitution, it would need the agreement of the states to become law.

Bill Shorten presented the principles to the Council of Australian Governments (COAG), where the Australian Government, with its money, sat together with the states and their constitutional powers. In February 2011 COAG endorsed the National Disability Strategy.

Treasury reviewed the New South Wales modelling and Stronger Together so it could contribute to the state’s submissions to the Commonwealth’s Productivity Commission – which was preparing a report on disability services, and the proposed scheme. With John Walsh sitting as a commissioner, it seemed unlikely that the scale of the economic challenge would escape the Commission’s notice.

2011 also brought ‘Every Australian Counts’: a campaign to ensure the Australian Government went ahead with a national scheme. The campaign’s emotive call for sympathy towards disadvantaged Australians was astutely tempered with pragmatic claims appealing to a thoughtful or sceptical audience. A campaign brochure issued in June 2011 reads:

The campaign retailed conclusions drawn by the Productivity Commission. It stated that the annual cost of Australia’s disability system was $6.2 billion, of which the Commonwealth paid $1.7 billion directly, and the states paid the balance. It stated that an additional annual outlay of $6.3 billion was required. In August, the Productivity Commission circulated its report recommending adoption of the scheme.⁴

When a national scheme seemed inevitable, NSW Treasury focused on finalising detail and preparing for transition. Kevin Cosgriff examined pricing questions; Michael van Rosmalen looked into complexities of the overlaps between disability and other sectors including health and education. Rick Sondalini, Director of the Health Branch, worked on modelling and took charge in 2012 of topics that still had to be sorted out with the Australian Government.

In December 2012, COAG endorsed the National Disability Insurance Scheme or NDIS. In what must be taken as a tribute to the value and insight of Treasury’s work, New South Wales was the first state to pass on its disability role by signing up to the Australian Government’s National Disability Agreement.

With the ever-increasing cost of the NDIS, the Commonwealth and the state and territory jurisdiuctions have been discussing policy options. Due to friction over the Commonwealth Grants Commission’s 2024 GST distribution decision, this has pilled over into discussions about NDIS funding.