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NDS financial sustainability report signals need for better pricing and planning

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11/09/2017

NDS has released new research (PDF | Word) that examines the financial sustainability of the disability sector. The analysis represents the most detailed, independent investigation of the financial sustainability of specialist disability service provision ever undertaken in Australia.

The research was led by Prof David Gilchrist from The University of Western Australia and covers financial data (2014/15 and 2015/16 financial years) for a representative panel of disability service providers. The data includes only a small portion of income from the NDIS but establishes a baseline from which to analyse the financial effect of the NDIS as it expands.

Key findings

  1. Panel members' rating of their organisation's financial performance declined. In 2014/15, two-thirds of panel members rated their organisation as strong or very strong, but this dropped to 44 per cent in 2015/16. Optimism about future financial performance was also weaker.
  2. Aggregate donations and bequests remain a significant contributor to sector income, representing more than 3 per cent of total income in 2015/16. This is an essential resource for organisations that are not able to break even from the provision of services, but can be volatile and therefore adds risk to service provision.
  3. Nearly three quarters (73 per cent) of the panel reported that demand for their disability services increased during 2016, but a third (33 per cent) reported they were unable to satisfy all requests for service. The same proportion (77 per cent) expected demand for their services to increase during 2017 and, again, 32 per cent expected they would not be able to meet demand.

The research further emphasises the findings of the first report released in 2016 about the concurrent challenges of growth and transition. Organisational respondents are fully supportive of the NDIS policy, but many are experiencing financial stress, are concerned about the viability of their disability services and do not expect to meet demand for services in 2016/17.

Similarly, the report echoes concerns raised by NDS and recently in research by UNSW that NDIS pricing is a constraint to quality services and decent jobs.

Independent research by leading academics raises further concern about whether the sector has sufficient, suitable and available assets to fund the scale-up required, and if there is enough incentive (i.e. attractive pricing) to encourage the level of investment needed to build the sector toward the vision of a growing, diverse and innovative sector.

The Productivity Commission, in its draft report on NDIS funding, has recommended the continuation of this research. NDS agrees. Research of this nature plays an important role in monitoring the transformation of the sector and will assist in facilitating the development of policy and approaches to market stewardship that foster a strong and efficient supply of disability services, supporting the achievement of the objectives of the NDIS.

NDS would like to take this opportunity to thank the many service providers that generously contributed financial data to support this work.

As noted in a recent NDS news update, the NDIA has contracted AbleInsight, a consultancy, to begin collecting data that will support benchmarking of a limited range of service categories.

Contact information
Gordon Duff, General Manager - Sector Development and Research, 02 9256 3117,