Budgetary reforms to NDIS – Should (SDA) investors be worried?
The Federal Budget last week signalled a revised trajectory for Australia’s National Disability Insurance Scheme (NDIS) with a key focus on driving efficiencies and cutting costs. The Federal Government plans to reduce costs in the NDIS sector from $17.2bn to $1.9bn over four years. So how do these reforms affect investors in the NDIS space?
Background
A formal enquiry by the Productivity Commission in 2011 identified several concerning shortcomings in disability service arrangements at that time. It found that consumers with a disability had limited choice for services that were already “inequitable, underfunded, fragmented and inefficient”. These findings drove the Australian Government to introduce NDIS Legislation which was finally passed in March 2013. This legislation created the National Disability Insurance Scheme Act 2013 (Cth) to operate alongside the Scheme and the National Disability Insurance Agency (NDIA).
Over time, both recipients, critics and advocates of the Scheme have heralded it as ‘a mess’.[1] Reports of bureaucracy[2] and a lack of evidence-based support resulting in ballooning appeal costs are common negative sentiments, among many, shared by those who engage with the Scheme.[3]
When the NDIS was first established in 2013, there were just under 8,000 people seeking support, today there are 550,000; of which 22,479 nationwide, have a need for specialist disability accommodation (SDA).[4] SDA provides accommodation for individuals who require specialist housing solutions and extensive support due to extreme functional impairment. While SDA support provides accommodation to those who need it, Supported Independent Living (SIL) support is a shared living experience for people with a disability who have higher support needs and have SIL funding in their NDIS plan.[5][6] SIL support helps individuals develop their individual skills while encouraging them to live as independently as possible.
In some circumstances, Scheme participants may receive both SDA and SIL funding. However, the vast majority of NDIS recipients seem to be those on Supported Independent Living (SIL) support rather than the SDA.
The 2023 budgetary reforms certainly look to tighten the requirements around SIL funding and support.
The key budgetary reforms
The largest amount dedicated to streamlining the NDIS will invest $732.9 million to improve the effectiveness and sustainability of the NDIS. The key changes include:
- Creating efficient systems and capabilities: This will be achieved by hiring additional staff and developing solutions backed by evidence to deliver equitable and consistent decisions.
- Creating long-term solutions for those with access to the Scheme: This will be achieved by providing participants with a flexible lifetime approach to their plan as well as providing participants with the resources to manage their plan within their given budget.
- Cracking down on fraud: This will be achieved by creating both, systems that detect and prevent non-compliant payments, as well as targeting services that overcharge or overservice Scheme participants.
Given the NDIS is the fastest-growing government expense, with costs projected to increase by almost 14% a year if no action is taken – the government has pledged to cut that growth to 8%.
A large part of the total $15.3 billion cost reduction (over 4 years) is targeted at creating efficiencies in SIL and SDA support. In the SIL space, this will be achieved by hiring more specialised employees with disability knowledge, combatting fraud and unethical practices and using the Government’s buying power to negotiate cheaper products and services.
Additionally, the proposed reforms will have positive flow-on effects for investors in the SDA space as there remains a significant shortage of SDA properties and the government remains focused on continuing to invest in the SDA sector.
[1] https://www.afr.com/politics/federal/an-oasis-in-the-desert-why-the-ndis-is-a-mess-20220427-p5aggq
[2] https://www.abc.net.au/news/2020-01-20/ndis-report-details-frustration-and-poor-experiences-with-staff/11881312
[3] https://www.theguardian.com/australia-news/2023/may/11/labors-15bn-ndis-savings-push-sparks-concerns-of-service-cuts
[4] https://www.apimagazine.com.au/news/article/ndis-property-investment-risky-but-rewarding
[5] https://ourguidelines.ndis.gov.au/supports-you-can-access-menu/home-and-living-supports/supported-independent-living
[6] https://www.sunnyfield.org.au/services/accommodation/supported-independent-living/
Queries
There is clearly a lot of noise around the NDIS reforms proposed in the Budget, however, the Banking & Finance and Corporate & Commercial teams at Cornwalls can certainly assist you in making informed decisions with respect to the legal implications arising from the proposed reforms.
Disclaimer
This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.
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