Radical shake-up of disability support services following scathing review

Whaikaha - Ministry of Disabled People, will have its functions dramatically reduced, with responsibilities for commissioning services for people with disabilities passed to the Ministry of Social Development by October.

Disability support services comprise the bulk of Whaikaha’s $2.6 billion budget. It is the third time in half a decade commissioning services will move ministries. They began the 2020s sitting with the Ministry of Health before being given to Whaikaha in 2022.

The change will mean what is left will be a smaller, but more independent ministry. Whaikaha is currently a departmental agency sitting under the Ministry of Social Development. It will be changed to a standalone department.

Whether these reforms will result in changes at the top is unclear, with Disabilities Issues Minister Louise Upston saying the reforms would involve the Public Service Commission, and chief executive Paula Tesoriero not saying whether she would reapply for the role if it were made vacant as a result of the commission’s involvement.

MSD will establish a new department for commissioning disability support services, which will report to a new deputy chief executive.

A taskforce will be sent into Whaikaha to help it make the changes. Upston also said the expansion of the Enabling Good Lives approach would be halted for now. The approach was designed to give people with disabilities more autonomy over the services that they use.

“Decisions about how to proceed with the recommendations on eligibility criteria for flexible funding will be made later in the year after consulting the disability community,” Upston said.

The changes were announced after a scathing review found it had “no controls” to restrain exploding service costs and, just six weeks into the current fiscal year, is on course to blow its funding for this year, despite receiving a generous top-up in the Budget.

The report was led by former Department of Prime Minister and Cabinet head Sir Maarten Wevers. A copy, obtained by the Herald earlier, warned that disability services spending has blown budgets for almost a decade, even prior to Whaikaha’s establishment in 2022.

Upston said she would accept the review’s recommendations, but has gone even further in shifting Disability Support Services to MSD, which was not recommended by the review.

Two other significant recommendations will be acted on.

Wevers recommended freezing funding levels for residential facility-based care for this year at last year’s spending levels, pending a review. The review will “stabilise the financial underpinnings of services to a group of clients with some of the highest needs”. It also recommended taking “no action” on price increases from disability support providers in order to clamp down on persistent cost inflation.

The ministry was given a 6% increase in funding for disability support at the Budget, but the Wevers review warned that passing this through to providers will mean the ministry facing “even greater cost pressures in the out years” as providers are likely to absorb that increased funding in their billing.

It recommends reviewing contracts and pricing and using that 6% in funding to meet “increased demand” and not to give in simply to “increased price” for the same services.

This will set Upston and the Ministry of Social Development on a collision course with disability service providers, which the ministry said are “expecting price increases” this year.

The review said the problems went all the way back to planning to set the ministry up.

“Numerous risks identified in the planning process for the ministry have eventuated in practice, including, in particular, ongoing budget over-runs,” the review said.

Labour’s acting Disability Spokeswoman Carmel Sepuloni said the Government’s decision to pause Enabling Good Lives was “cruel”.

“This programme gives choice and control to disabled people to lead better, meaningful, and dignified lives. To halt the rollout in its tracks, is nothing short of shameful,” Sepuloni said.

“Ironically, it was a National-led Government that started the programme. Labour honoured this commitment and made record investment into it,” she said.

Green Party Spokeswoman for Disability Kahurangui Carter said Upston’s reforms were “a major setback”.

“Once again, the Government has failed to engage and include the views and expertise of disabled people in making major changes to a Ministry tasked with supporting them,” Carter said.

“To shrink Whaikaha to just policy and advocacy functions, the Government is weakening its capacity to deliver, making it less effective,” she said.

Wevers concluded the ministry’s establishment was “rushed” and that it was “ill-prepared” for the crucial job of commissioning services for people with disabilities

He found the ministry “lacks many of the public sector disciplines and operational practices seen in other Government agencies”.

“Financial controls are poor. It is difficult to gain a clear understanding of how well disabled people are being supported through providers the ministry has contracted,” the report said.

That the “seriousness” of breaching its annual budget was “not ... widely appreciated by the ministry’s executives”, despite it being a “matter of law for all Government agencies”.

The report noted the sector was littered with pilot schemes that had begun but never finished, creating a Balkanised environment of funded projects.

There was an “absence of reference” to the all-important Public Finance Act and Public Service Act inside the ministry.

Poor management of disability support service funding has been a problem since at least 2015/16, when this funding was managed by the Ministry of Health, before it was rolled into Whaikaha when it was created in 2022.

Funding exceeded its appropriation each year bar one (2022/21). The review found that each year the disability support services budget was topped up from another part of the wider health budget. This problem was only exposed once disability services funding was split out on its own.

This has created an expectation within the ministry that “additional funding will be made available every year”, and the “widespread belief” in the ministry that cost growth “simply cannot be constrained by budgetary controls”.

These pressures led Wevers to conclude the agency would blow its budget again this year unless action was taken.

“There are no controls in place to contain this trajectory. Accordingly, we have no reason to believe that the anticipated cost growth will be constrained in 2024/25, even within the 6% growth in funding that has already been provided,” the report said.

Some changes appear to be out of the ministry’s control, including enormous growth in the number of people who receive disability support funding, which has risen by 43% since 2019 to 50,000 people.

Most of this growth has been driven by people presenting with intellectual and autism spectrum disorder, which had grown by 2500 and 9600 respectively since 2019, resulting in cost increases of $293 million and $176m respectively.

When Upston commissioned the Wevers review in May, it was intended to be a two-part review, with phase two focused on the “long-term sustainability” of the disability support service system.

Wevers advised the ministry is in such “urgent need of change” that phase two should not proceed currently. Instead, the report recommended “a team of experienced staff” be brought into the ministry to strengthen processes and systems.

Wevers was joined as reviewer by Tregaskis Brown senior partner Leanne Spice, and Wellington City Missioner Reverend Murray Edridge.

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.