Analysis: It’s unclear whether the review into how disability funding is allocated will look to scrap or reduce the use of externally contracted host agencies that help disabled people manage their money.
The Minister for Disability Issues, Penny Simmonds, would only go so far as to say “we do need to look at a range of things”.
When asked specifically if this would include host agencies, she said it was about ensuring value.
“We’re going to have to look at a number of things like that. But we have partnerships, we’re working with host agencies, so we need to work with them and ensure that we’re getting the right value.
“So consultation is happening now. We’re getting a lot of feedback as you would expect and from that a really good sense of the things that work well, and then we need to start looking at where perhaps we need to tighten up some of those regulations.”
Disability supports and how they are administered vary greatly and some options are only available in some parts of the country. However, Individualised Funding and Carer Support – which received the bulk of the attention after the Whaikaha announcement on Monday – is available nationwide.
Carer support is managed through a claims process via the Ministry of Health, but Individualised Funding is different.
People receiving an Individualised Funding allowance are assessed by a needs assessment provider who then decides how much money they will get.
However, they don’t have this money deposited into their bank account, like a student eligible for student allowance does or someone on Jobseeker, for example.
Instead, host agencies (there are nine) are contracted by Whaikaha to sign off on every purchase, and pay out or reimburse the disabled person.
It is the only government support that requires third party oversight and intervention in this way.
The government pays the agency a set-up fee for each new disability client, as well as an annual fee to manage their funds.
In the past the fee was a percentage of a client’s overall funding allowance, but was changed after a review in 2017 to be a set-fee for all.
The Ministry of Disabled People pays host agencies $980 a year, per client, for managing their account and a one-off $550 set-up fee.
It does not come out of an individual’s personal budget, but it does come from the same departmental pot.
Figures from the minister’s office state that each year more than 3000 new disabled people become eligible for support.
If thousands more clients are being onboarded each year without a substantial change in total budget funding, then it makes sense that the money has started to run down. The other aspect is that with the loosening of the guidelines under the previous government people actually were spending more of the personal budget they had been allocated.
This suggests Whaikaha – and before it the Ministry of Health – may have relied on people not spending their entire allocation, because they could not access it in reality.
With 3000 new people each year more than $4 million of new fees are charged by host agencies to onboard them – let alone the almost $1000 each charged for the existing ones.
In the year ended June 2022 there were about 10,000 people receiving Individualised Funding packages, roughly half of which were worth less than $5,000 a year.
Which raises the question, is it good value for money to shell out $1000 a year, to keep an eye on $5,000 (or even less)?
Manawanui chief executive Marsha Marshall said the organisation was very comfortable that this was the case.
“All nine hosts work with disabled people every day to support them to manage their role as employers of carers, budgets within the guidelines set by Whaikaha and accurate auditable payment of public funds. The current fee model has been in place for a number of years under the Ministry of Health and now Whaikaha policy,” she said.
Manawanui is the largest host provider and is chaired by former Prime Minister Sir Bill English.
It only has a small number of low-funded clients – about 50 who qualify for less than $2,000 a year. However, Marshall said sometimes it was them who needed the most assistance.
Last year Newsroom examined the use of host agencies by Whaikaha and spoke to research firm Synergia’s David Todd, who has worked and researched personal budgets and disability funding for 20 years.
He said the evidence showed when it came to small funding allowances it became difficult to see the value of a host provider.
“My experience has been that it becomes difficult for host providers to provide much value for the level of package that people get.
“My work has looked at some of the administrative burden that there is to administer a package, whether it’s a small value or a big value … and for very small packages, [the admin cost] becomes almost the value of the package itself.
“Our work has always shown that about that $5,000 package per annum, the actual cost of administering one of those packages through a host provider and some of the other components that are needed actually outweighs the package that someone actually gets from a total cost perspective for the Government.
“So, where possible I’ve been a strong advocate to say that people with particularly smaller packages should have the choice of whether they want to use those providers or not.”
Arguments have previously been made that the Ministry of Social Development would be a much better department to administer the funding, given it administers other government supports.
But for some, the use of a host agency is helpful, and even necessary.
Home care support (which is primarily what individualised funding is used for – the other part is respite) may require employing a carer.
Employment obligations, tax, Kiwisaver, ACC and the like then becomes the responsibility of the disabled person, and host providers help people get this right.
Whaikaha deputy chief executive Amanda Beckmann would not say whether host providers would be on the chopping block, but her comment, provided to Newsroom, suggested not.
“Hosts play a vital role in helping people understand how to use and manage their Individualised Funding.
“Whaikaha will work with the disability sector, which includes IF Hosts, and the community to ensure our funding is being allocated equitably and within the purpose for which it is intended.”
Previous comments to Newsroom from Whaikaha have confirmed the agencies are in place to make sure funds are not misused.
“It is important that government and the public have confidence that money appropriated for disability supports is spent on disability supports regardless of the amount of funding received,” Whaikaha’s Russ Cooke told Newsroom last year.
And that’s where the nub of the issue seems to lie – why are disabled people not trusted to spend their own money?
