Research report

National Disability Insurance Scheme - management of transition of the disability services market

9 Nov 2016

Audit objective and criteria

Recognising that a well-functioning and responsive disability services market is fundamental to the successful implementation of the NDIS, the audit focused on the management of the transition of the disability services market by the Australian Government entities with responsibility for the NDIS—the Department of Social Services (DSS or the department) and the National Disability Insurance Agency (the NDIA or the Agency).

The objective of the audit was to assess the effectiveness to date of the management of the approach to transitioning the disability services market to the NDIS market arrangements. To form a conclusion against the audit objective, the ANAO adopted the following high-level criteria:

  • the approach by the department and the NDIA to transition the disability services market has been informed by lessons learnt from the trial sites and other relevant market transformations;
  • the department and the NDIA have effectively considered implementation issues in their management of the approach to transitioning the disability services market;
  • the Sector Development Fund has been used strategically to support and inform the transition of the disability services market; and
  • the department and the NDIA have effective mechanisms to continue to adjust and refine their approach to transitioning the disability services market.


By mid-2016 the department and the NDIA had established, or had taken steps to establish, the key building blocks for a successful transition of the disability services market to the new NDIS arrangements, but many risks and some gaps remain.

Within NDIS’ intergovernmental governance arrangements, the processes and timeframes for collective decision-making have been inconsistent with the timeframes for the rollout of the Scheme. This, along with a lack of clarity over roles and responsibilities, has contributed to delays, risk and complexity.

There is limited evidence of a strategic approach to the use of the Commonwealth’s $146 million Sector Development Fund, in the first three years of the Fund’s administration.

Both the department and the NDIA have captured, analysed and used lessons from the trial sites to develop market policy and operational settings in response to feedback and experience.

While the department did not have a clearly documented work program to implement its disability workforce development responsibilities, the Agency documented a program of activities to operationalise its market transition responsibilities. However there was no published overall work plan which sets out timeframes and deliverables.

There is a high degree of executive oversight of NDIS risks within both DSS and the NDIA but opportunities remain to enhance both intergovernmental and Commonwealth risk management.

Both the department and the NDIA have recently changed their organisational arrangements to improve their ability to meet their responsibilities. In October 2016, DSS developed a draft NDIS Transition Program Plan to support its market oversight role in the NDIS market transition. The NDIA’s transition planning provides for continued collection of data, and mechanisms are in place, or under development, to improve data collection.

Finalising the national NDIS Quality and Safeguarding Framework and its supporting infrastructure and implementation arrangements needs to be a priority to improve regulatory certainty and address market transition risks. The deployment of a new NDIS ICT system from July 2016 experienced significant problems. Timely and accurate communication is essential in such circumstances.

Going forward, the NDIS is a complex social and economic reform. The magnitude of the growth and change required to the disability services market cannot be underestimated, and the transition to full Scheme elevates an already high risk environment. This requires ongoing monitoring and active management. Within this context, both DSS and the NDIA need to invest in their capability to identify and resolve emerging market concerns for many years to come.

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