NDIS growth requires an investment plan for disability jobs
“To deliver on its great promise to people with disability and their families, the NDIS needs a strong and dynamic service sector with the resources to invest in growth and change. New research released by Curtin University and NDS underlines the challenge ahead for organisations operating with tight margins and few spare resources.” NDS Chief Executive Dr Ken Baker
A new study from Curtin University’s Not-for-profit Initiative and National Disability Services’ Centre for Applied Disability Research will provide governments, disability service providers and the broader community with detailed information on the supply and sustainability of disability services in Australia. This is the first report in an initial two-year study which will track the impact of the NDIS on the service sector as the reforms are implemented across Australia.
Chief Executive of National Disability Services (NDS) Dr Ken Baker said, “The NDIS places high expectations on the capacity of the non-government disability services sector to grow rapidly. If the NDIS is to meet the reasonable needs of almost 460,000 people with severe disability around Australia, it will require the employment of 70,000 new staff and a doubling in the supply of disability supports.”
“Growth requires investment and the financial sustainability report shows that in most disability service organisations margins and cash are tight. Many organisations are focused on cost-cutting to accommodate tight pricing by the National Disability Insurance Agency, rather than on growth and innovation.
“Disability service providers are keen to meet the challenge of increased demand under the NDIS but they need realistic pricing and governments to invest more in sector development.
“Last Friday, the Disability Reform Council agreed to ‘enhance its oversight of the developing market for the NDIS’. This is overdue. Disability Ministers decided on an Integrated Market and Workforce Strategy 15 months ago, but as yet there is no action plan and the Industry Advisory Groups proposed in the Strategy don’t operate. NDS has raised this matter with government.
“It is essential that governments, the NDIA and the disability services sector work together to develop and invest in a practical industry plan that will support the growth of high-quality services, so that the NDIS meets the legitimate expectations of the Australian community,” concluded Dr Baker.
Findings of the report are:
42% of service providers generate less than 3% profit.
The poor profitability of the sector suggests that many disability providers will struggle to generate enough profit to invest in the growth, change and innovation required by the NDIS.
The median current asset ratio for the disability sector is 1.9.
current asset ratios are a good indicator of short-term viability. 1.9 is a healthy ratio, however …
16% of organisations have a current asset ratio of below 1.
A current ratio under 1 indicates that a company’s liabilities in the next 12 months are greater than its available cash assets. Organisations in this category are at risk should their income decline or expenses increase rapidly.
Over 15% of organisations recorded a loss in the last financial year.
Curtin University Professor David Gilchrist said, “Of major concern is the extent to which the organisations we surveyed hold spare cash or cash equivalents that can be applied to the capital requirements needed to meet rapid change. Change of the magnitude required by many organisations can be an expensive process and, given the impact on those people relying on services, it is imperative that the changing environment be met by an appropriately resourced response.
“This research has revealed that the ongoing supply of disability services in Australia is at risk in the medium term if we don’t take some hard decisions today. Such decisions include the need for us to better understand the true cost of service delivery and for investment to be made in industry transition indeed, the same requirements as are generally met by government in any other major industry reform.”
Professor David Gilchrist concluded, “For the NDIS to realise its goals of improving the range and choice of services available to people with disabilities, there will need to be a strong, efficient and accessible supply of services. This evidence should help to facilitate the development of policy that fosters a strong, competitive and efficient supply of disability services and supports.