Explainer – the NDIS and the need for a provider of last resort

Explainer – the NDIS and the need for a provider of last resort

Thursday, 9 November 2017

The National Disability Insurance Scheme (NDIS) is currently being phased in to Victoria.

As the scheme, has become available, Victoria Legal Aid has become concerned about cases where clients with significant disabilities, who are entitled to supports under the NDIS, are stuck in prison or at risk of harm because they cannot get the services covered by their NDIS plans.

When service providers cannot or will not attend to participants’ needs it is called ‘market failure’.

This issue of market failure highlights serious risks to how the NDIS will work for clients with complex disabilities. We are urging State and Federal Governments to take notice and fix this issue before it affects more vulnerable people.

How market failure affec​ts our clients

In our experience, clients who experience market failure in securing support services have complex intellectual disabilities and interactions with the criminal justice system. They are clients who share the following characteristics:

  • NDIS participants, with plans providing for intensive supports including 24/7 care to support their independent living;
  • remanded into custody, or at risk of imprisonment;
  • offending is directly related to their disability;
  • cannot get bail from the court because they cannot safely return home without residential care supports in place;
  • cannot attract service providers to give them the necessary support or attract providers to coordinate their home supports; and
  • due to their disabilities, they are likely to be unfit to plead to charges (in some cases, very minor charges) and so must remain in custody.

Alarmingly, for these very vulnerable people, in Victoria there is no ‘provider of last resort’ or clear pathway through which federal or State agencies may have responsibility for ensuring their access to essential disability services.

Due to this responsibility vacuum, clients are detained in isolation cells and solitary confinement for long periods. In most cases, they are detained for more time than they would have served for the offences themselves. This carries huge risk for our clients. Our practice experience shows that clients on remand with intellectual disability are:

  • at serious risk of harm to their mental health due to their lack of intellectual and emotional resources to cope with the stressful prison environment
  • at risk of physical harm, and
  • at risk of social harm, whereby the usual social supports in the community are disrupted or removed completely, making the transition back to community care more difficult.

Read about our clients and the market failure by the NDIS.

Market failure has been predicted from the start

The NDIS model relies on the disability services market ensuring that every person who receives funding from the NDIA for services actually gets those services.

The NDIS and State governments are aware that there is a risk that there will be ‘thin’ or ‘weak’ markets, where service providers may not necessarily wish to do business with NDIS participants. It was predicted this could occur where a person has complex disabilities and difficult behaviours. Multiple government inquiries have now confirmed that the risk is real.

Under the former regime of State-based disability systems these ‘unattractive buyers’ of services were all but guaranteed to still receive disability supports because it was the State who provided or arranged for those services to be provided.

However, under current arrangements, after people are transitioned to the NDIS that safety net disappears.

The need for a provider of last resort

Both the NDIS and each other State and Territory have foreshadowed that to address market failure, there should be a ‘provider of last resort’ who will meet the service needs.

However, this has failed to eventuate in most States and Territories, there are no provider of last resort arrangements – but many people, including people with complex needs are being transitioned to the NDIS. The Northern Territory is exceptional and has put in place some provider of last resort systems.

The current arrangements between the Commonwealth Government and Victoria do not state what government entity is responsible for ensuring that vulnerable people actually receive services. In July 2017, the NDIA told the Productivity Commission they would act as a provider of last resort, but the NDIA have told our clients they are ‘just a bank’.

The failure of Governments and the NDIA to take responsibility for market failure is having profound consequences for our clients in Victoria at the forefront of the roll-out of the NDIS in Victoria.

In our view, the NDIA and the Victorian government must urgently allocate responsibility for immediately providing services to this vulnerable cohort of clients.

VLA recently made the following Recommendations to the Joint Standing Committee on the NDIS:


  1. NDIS participants who remain in custody because of a failure to secure disability services should be identified by the NDIA and the Victorian government as a matter of urgency.
  2. Immediate and robust service solutions should be developed for these clients, whether this is consistent with current policy or developed on an interim bespoke basis working between State and Commonwealth parties.
  3. The Bilateral Agreement in Victoria should be amended to provide a clear framework for a provider of last resort. Consequent amendments should be made to the Operational Plan.
  4. The NDIS should publish its policy on provider of last resort, providing clear indications to participants about how to engage the NDIS for assistance as a matter of urgency.

For more information see our Submission about these issues to the Joint Standing Committee on the NDIS.

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