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A sector on the edge pleads for help

A $2 billion pay equity settlement hasn’t been a magic cure for years of under-funding for disability support services. David Williams reports.

It has been a landmark and liberating seven months for Christchurch’s Bret Genet-Rentoul.

Last July, the 20-year-old, who has an intellectual impairment, left his foster home at Woodend and went flatting in the city. And last week he started a work and life skills course at local polytechnic Ara.

Flatting was scary at first, Genet-Rentoul admits. But he lives near his younger brother and a friend has moved around the corner.

“It was a little bit of a struggle at first but I made it work,” he says, matter-of-factly.

Genet-Rentoul has been ushered through the changes by CCS Disability Action – which took over supporting him after his previous provider, IDEA Services, pulled out of some Government contracts two years ago. He gets almost daily help from CCS Disability Action, mainly through support worker Andry Rianto.

Talking to Newsroom at CCS Disability Action's Christchurch offices, Genet-Rentoul: “If I have any appointments or I just need someone to talk to then I’ve got Andry over there to talk to me and he’s just there to keep an eye on me. He also makes sure I have enough food in the cupboards.”

(Andry clarifies his help extends to budgeting and problem-solving.)

Genet-Rentoul adds: “If I wasn’t under CCS Disability Action I wouldn’t be in my flat now.”

Life is on the up for Genet-Rentoul. But for CCS Disability Action and other providers, their financial situation is so dire they’re carrying a message of looming crisis to ministers.

Equity deal only partly the answer

A $2 billion pay equity settlement announced two years ago, lifting the wages of 55,000 workers, was hailed as a historic moment that addressed health sector under-funding.

“Home and community support, disability and aged residential care workers are widely seen as amongst the most deserving of recognition as a pay equity case,” then Health Minister Jonathan Coleman said. That deal came on top of the 2016 settlement mandating that care and support workers be paid for time and costs of travelling between clients, at an annual cost of about $38 million.

(An amendment bill is also vexing the secondary school teachers’ union.)

Now, most of the lowest-paid staff are better off. But Garth Bennie, chief executive of sector lobby group Disability Support Network, says the move has actually made the sector’s under-funding worse.

“From a provider perspective, it’s simply money to allow providers to meet their legal commitments in terms of wages – it’s money-in, money-out. That is not effectively a price or funding increase. The pay equity legislation exacerbates providers’ funding woes because the government funding of pay equity only funds support worker wages, it doesn’t meet the on-costs that come with a significant increase in wages.”

The biggest “on-cost” is what’s called relativity. Bennie: “Each time the support worker wage increases, providers have to maintain the relativity between support workers and their supervisors and managers. And that’s not funded.”

Without that change, the hourly rate of some frontline staff will overtake their managers.

Today Bennie will petition Disability Issues Minister Carmel Sepuloni and Associate Health Minister Julie Anne Genter for help – hopefully starting with this year’s Budget.

“We can’t do as much of that as we would like to. We feel we’re subsidising government.” – David Matthews

Disability support has a variety of funding sources, including Accident Compensation Corporation, local councils and health boards. But the two biggest sources are through the Ministries of Health and Social Development. In the current financial year, the ministries will spend $1.35 billion on contracts with disability providers.

But it’s not enough.

CCS Disability Action’s latest accounts show its operating expenses of $43.4 million pushed it into a $2.9 million operating deficit. But thanks largely to bequests of $3.2 million it made a surplus. The problem is, bequests are unreliable and can bounce around – they were $1.3 million the year before. CCS Disability Action has a good balance sheet, with investments of $44.6 million and property, plant and equipment valued at $21.5 million.

Chief executive David Matthews says CCS Disability Action can’t rely on bequests and investments forever. It’s already using its money to “offset the deficit” from contracts.

“We can’t do as much of that as we would like to. We feel we’re subsidising government.”

Matthews, a former Disability Support Network board member, says the contract money covers direct costs but not indirect costs, like staff training. Then there’s the backroom systems for things like invoicing, client management, finance, health and safety, and human resources information. Contracts get consumer price index adjustments, but organisational costs are rising faster, he says.

“It’s becoming more of a crisis each year that the gap between how our contracts need to be adjusted, in terms of what we need, in terms of what we receive, isn’t addressed.”

Union negotiations with CCS Disability Action were completed last week. Matthews says it offered to start addressing relativities, considering coordinators are paid not much more – if anything more – than some support workers. “We can’t hold that back.”

Selling the family silver

E tū community support industry coordinator Alastair Duncan says negotiations with CCS Disability Action took eight months and not all members were happy with the result. The main issues were about workload, health and safety, and relative increases for coordinators and managers.

“To be fair to CCS Disability Action, we know if they were funded properly they would meet all of those claims tomorrow.”

He thinks CCS Disability Action has, in some offices, reached into reserves to pay staff more. (Matthews says CCS Disability Action head office has had to bail out some branch offices.) “At the point that you’re having to reach into reserves [to pay operational costs] ... that suggests there’s a crisis in the sector.”

E tū was the union that brought the pay equity claim on behalf of care worker Kristine Bartlett. Duncan says years of underfunding means the job of properly funding care and support workers isn’t finished.

Voluntary organisations are relying on property investments to get by. Competition for funding is forcing some charities to shut offices and cut services. (Matthews says shrinking organisations hardly ever grow again. “That’s why we have 0800 number services rather than people services.”)

All eyes will be on the Government’s so-called Wellbeing Budget in May. But first, there’s Disability Support Network boss Bennie’s meeting, today, with Government ministers already facing a plethora of strikes and pay demands from the likes of teachers and junior doctors.

Genter, the Associate Health Minister, says in a statement she’s meeting with Bennie to discuss the best path forward: “I am aware that our health system was pushed to breaking point under the previous government and that there are no quick fixes for this.”

National’s disability spokesman Shane Reti tells Newsroom by email: “The upcoming May Budget is an opportunity for the Government to invest in the disability sector.”

E tū’s Duncan says, bluntly, push has come to shove. “Perhaps the only extraordinary thing is it’s taken this long for that petition to become so obviously needed.”

Sector $150m short: report

A Deloitte report, prepared for the Disability Support Network last December, puts the sector’s shortfall at roughly $150 million. That’s not a huge sum of money, CCS Disability Action boss Matthews says, if you compare disability spending to the overall health spending.

But there are several looming complications which will change this picture.

The cost of the pay equity settlement will balloon in the next few years, because of the Government’s more ambitious minimum wage increases. About one in four New Zealanders – more than a million people – identify as being disabled. That proportion is expected to increase as the population ages.

The disability sector itself also faces huge changes.

Since last October, a new way of funding disability services has been trialled in the North Island’s MidCentral District Health Board. Under the trial, disabled people and their families can access a personal budget to be used flexibly. Any change from being paid ahead of providing services would put more pressure on providers.

(CCS Disability Action lost four staff to the trial, as the starting salary for the trial’s “connectors” was $60,000 a year. Matthews: “There is no contract that we receive from Government where we could pay our experienced service coordinators anywhere near that $60,000 figure.”)

Disability Support Network has been working with the Health Ministry on a pricing model to reveal the true costs of contracted services. But the latest iteration contains many errors, according to the Deloitte report. Bennie says it’s been reverse-engineered to fit a predetermined budget cap – “It’s full of all sorts of jiggery-pokery, basically” – but it would be a small step forward if the Government adopted it.

“We don’t expect it to be solved all at once but a start is urgently needed.” – Garth Bennie

In May’s Budget, Disability Support Network wants the Government to agree to start closing the funding gap – although Bennie says more work needs to be done to benchmark the costs and quantify the gap.

“We are currently frustrated at the lack of progress over the last two years. We have to acknowledge that this Government has inherited a problem that has been a decade in the making. We don’t expect it to be solved all at once but a start is urgently needed.”

How bad is the situation?

Bennie says services are being stretched to breaking point. “This is undermining the quality of everyday life of disabled people and their families, which is simply not fair. We are heading down the same path as mental health services. It’s that kind of crisis that is on the very near horizon.”

CCS Disability Action's Matthews says it has restructured and driven down budgets, especially after taking over IDEA Services contracts. But there’s a limit to how much can be squeezed. Given the sector is getting tougher and the changes ahead, he is prediction some providers will go under.

“If we are to continue to support the most vulnerable people in our society then we do need for that to be properly recognised and not to be taken advantage of because we happen to call ourselves a not-for-profit or a charitable organisation.”

Christchurch client Bret Genet-Rentoul will be hoping CCS Disability Action survives the coming financial storm. After all, it has helped him achieve some much-needed independence. “That’s why I enrolled myself into course, so I’m not sat at home doing nothing. I just feel weird when I’m at home by myself.”

He has been looking forward to attending Ara. “It means I’ll be getting up early every morning, and sorting myself out and making my own way to course.”

Asked about his future ambitions, Genet-Rentoul points to Newsroom’s camera. He’s quite good with technology, he says, and Ara has digital skills and photography courses.

“When next year comes up I can try and enrol for one of those classes and see how it goes.”

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