Editors Note: The below article is very worrying as demand for services is only going to continue to grow and the NDIA and the Government need to have a plan in place to support businesses, develop their management and commercial skills to support the disabled participants. I am also very concerned that the hourly rates that the NDIA has set for services are wholly inadequate in the medium to long term – they simply don’t have enough margin in them to allow the service providers to provide staff training, ongoing professional development, upgrade infrastructure etc. Any business in any sector must set prices that allow not only for paying wages, but to maintain skill levels and put aside funds for future needs. Hopefully NDS can let us know what realistic fees are required to allow businesses to be sustainable. There is no point in the NDIA keeping fees so low and tight that disabled people will lose out in the long run.
A significant number of disability service organisations lack the financial capacity to meet the increased demand from the National Disability Insurance Scheme, according to new research.
Professor David Gilchrist, director of Curtin University’s School of Accounting Not-for-profit Initiative, surveyed 180 disability service organisations across Australia in the 2014/15 financial year.
More than 15 per cent recorded a loss, with 6 per cent reporting a loss of more than 5 per cent. While this means almost 85 per cent were profitable, 42 per cent recorded a profit of less than 3 per cent.
Gilchrist told Pro Bono Australia News these figures were likely to worsen in the medium and long term, especially as the rollout of the $22 billion NDIS continues.
“There is a significant disparity in terms of the sustainability and financial capacity of organisations in the disability services sector,” Gilchrist said.
“Some are travelling very well indeed, most are at the critical sustainability level in the medium term.
“In the short term there are about 16 per cent of organisations that are probably under significant financial pressure, but in the medium term I think a lot more organisations will be feeling that pressure as the need to invest in infrastructure to respond to the NDIS and other changes in funding regimes will make a difference to the way the organisation’s use their financial capacity.”
He said his findings were “incredibly concerning”.
“In the short term those organisations are going to be looked to to be able to meet the increasing demand as a result of the NDIS. And the demand increases not just a couple of per cent, it’s a very significant demand increase,” he said.
“But not only that – those organisations also have employees who have a lot of training and a lot of skills and a lot of experience. And they have a lot of intellectual property around the provision of disability services.
“If organisations do fall over there needs to be a plan for how those assets of those organisations can be retained in the sector.
“It’s not about trying to preserve Not for Profit or for-profit organisations that provide disability services so much as trying to preserve the capacity that’s inherent in them to be able to apply to this vastly increasing demand that we’re expecting.”
“I think it’s fairly clear that they can’t meet that demand ultimately, in the medium term if we don’t take a couple of important decisions.
“I think that a lot of organisations will be struggling to maintain their survival level to be able to expand and scale to meet the demand that is going to come out of the NDIS system.”
Gilchrist said it was clear the disability services sector would not be able to meet the demand for services in the medium and long term unless action was taken.
He said there were two steps to addressing the issue. The first is coming together as a sector to define what the sector is capable of, and collating information about the real cost of service deliver and the capacity of organisations to be able to provide services.
The second element is developing an industry reconstruction plan at a government level, “as they do in any other industry that’s going through a massive reconstruction”.
“We’ve seen state governments for instance talking about the developing industry reconstruction plans and putting significant money into taxi industries… in response to the Uber disruption… to allow the taxi industry to be a) recompensed for what they’ve suffered but b) to be able to compete on a more level playing field as well,” Gilchrist said.
He said his research should serve as a warning to the sector and governments to take action in the short term.
“One of the things we do have is some time, in the broader sense of the sector. So some organisations are under immediate financial threat,” he said.
“But it is in the medium term that the real and significant financial threat will come to reality if we don’t start to act now.
“I think not only the NDIA, but broader governments at the Commonwealth and the states and territories level need to be looking at the results of this particular study and thinking about how they can contribute to strengthening the disability services sector in the medium to longer term.”