The National Disability Insurance Scheme (NDIS) is revolutionising the provision of services to Australians with disabilities. The cornerstone of the scheme is its demand-side reforms: people with disabilities will get greater choice and control over the support they receive. This feature has understandably received most publicity and attention.

Supply-side reforms – the doubling of the provider market, changes in its mix, and the development of a national approach to quality assurance and provider oversight – have received comparatively little attention. Yet it is on the supply side that much of the NDIS’s risk exists.

Disability advocates have expressed concern about the ability of the disability services market to grow to meet demand. Advocates also have concerns that low wages will attract people without the required skills and competencies.

The NDIS shares important supply-side similarities with another high profile hybrid Commonwealth/state scheme, the “pink batts” Home Insulation Program (HIP). Like the HIP, the NDIS involves injecting significant funds into a provider market with insufficient capacity; and it relies on existing state and territory regulatory regimes to provide oversight, quality assurance and safety.

But while the HIP suffered catastrophic failures in regulating the provider market, the NDIS can avoid the same mistakes by learning these lessons from the HIP.

1. Implement strong and timely provider controls

The NDIS, like the HIP, involves significant investment to grow a market. This “honey pot” will attract new providers with varying experience, skills and motivations.

In this situation, neither a light regulatory touch nor reliance on the power of market forces is likely to suffice. Strong and timely provider controls are required. In the case of the HIP, these controls were introduced late and were continually being adjusted as problems arose.

Here, the NDIS has made an inauspicious start. While the inclusion as part of the NDIS of a national quality framework is positive, the delay in its development is of concern.

Also of concern is the NDIS’s reliance on existing and variable state and territory regulatory regimes not designed for the volume and demands of the NDIS. A scheme of the size and importance of the NDIS requires tailor-made controls.

2. Ensure proper coordination and communication

Hybrid schemes such as the NDIS and HIP involve numerous interactions and interdependencies. Many are obvious and known; others are subtle and may be hidden. At key points of the HIP, information about major risks either was not properly shared, or its importance not appreciated. Transparent and inclusive communication and consultation processes are essential.

The NDIS’s staged implementation allows the design and operation of the scheme to be tested and adjusted.Jenny Sturm/Shutterstock

Here, the early signs of the NDIS are encouraging. Strong governance arrangements are in place. COAG has established a dedicated Standing Council on Disability Reform to oversee and coordinate all jurisdictions’ input into the reform. And its implementation is being overseen by an independent statutory agency, the National Disability Insurance Agency (NDIA).

Importantly, the NDIA comprises members with appropriate skills, experience and knowledge, and is supported in its role by an Independent Advisory Council made up of representatives of the reform’s key stakeholders.

3. Avoid taking short cuts

Many of the HIP’s problems can be traced to its prioritisation of speed over proper process. As a result, many risks associated with the program were either not identified, or their magnitude and remedial action not properly understood or scoped.

The NDIS appears to be learning this lesson. While speed of delivery is important (the previous Labor government brought forward the launch of the NDIS to 1 July 2013, a year earlier than the Productivity Commission recommended), priority is being given to careful analysis, planning and design.

The staged implementation is particularly wise, allowing for the design and operation of the scheme to be tested and adjusted while limiting the consequences of any errors.

4. State and territory regulators need to gear up

Like the HIP, the NDIS was largely developed and designed by the Commonwealth but relies on the active cooperation and participation of the states and territories for its effective and efficient delivery.

In the case of the HIP, the many reports into the program make clear that the sheer volume of activity overwhelmed some state and territory regulators.

The extent to which the NDIS is learning this lesson is unclear. On the demand side, disability advocates have expressed concerns that the speed with which state and territory governments are exiting the provider market will leave some people with disabilities without support.

On the supply side, the Commonwealth has made clear in its guidance to providers that they will need to comply with all applicable state and territory disability, general consumer protection and occupational health and safety laws.

But the Commonwealth has not provided any funding to the states and territories to cover the increased demands this will inevitably place on them. Despite this lack of funding, I hope appropriate resourcing decisions are being made at the state and territory level.

Notwithstanding their starkly different subject-matter, the NDIS and HIP initiatives share many supply-side features. All governments and regulators involved in the NDIS should heed the lessons of the “pink batts” scheme.

Eric Windholz does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.