2017 Price Controls Review: Submission on
NDIS Pricing Arrangements
NDS appreciates the opportunity to contribute to the 2017 Price Controls Review.
Disability service providers are very concerned about the inadequate prices for some
NDIS supports. Inadequate prices are a threat to their financial sustainability and to
the NDIS’s capacity to meet the demand for quality services.
Although this submission uses the discussion paper’s term ‘attendant care’, NDS
makes the point that the term does not reflect the active support provided to people
with disability to assist them to engage in life activities and opportunities of their
choice. Active support involves skills that extend well beyond a ‘care’ role.
While the financial benchmarking exercise proposed by the NDIA could provide good
evidence on costs to inform future price controls, NDS would endorse it only when
confident that data governance and reporting arrangements are sound.
Section 2.1 notes that the NDIA uses two forms of price control:
 Price limits (maximum prices that providers can charge for a support)
 Price benchmarks (the NDIA’s view of the cost of efficient service delivery)
Benchmark prices are given for Supported Independent Living (SIL) and the 2016-17
Price Guide clearly states that quoting is not required in situations where providers
are willing to accept benchmark prices. Contrary to this, the NDIA is now requiring
providers to quote for all SIL. NDS acknowledges the NDIA’s concern about the
large number of participants for whom providers are now quoting, but does not
believe that requiring quotes for all SIL is the way to tackle this.
The extra quoting work demanded of non-government organisations is not required
of government SIL providers. To compound the inequity, government providers are
paid at higher rates than SIL benchmark prices (the rates are set by in-kind
arrangements). The additional administrative burden on non-government providers
and the lower prices paid to them conflict with the important principle of competitive
neutrality.
Section 2.1.1 outlines the NDIA’s rationale for imposing price controls. In response,
NDS notes that a competitive market already exists in the (adjacent) community
aged care sector and believes it is time to expand deregulation beyond selfmanaged NDIS participants. The comment that there is insufficient information
available for participants to make effective choices is concerning. Slow progress in
introducing the promised e-market is not the responsibility of providers and should
not be used as a reason to delay further steps towards deregulation.
Contrary to the NDIA’s concern about the high cost of switching providers, NDS’s
2016 Business Confidence Survey found that NDIS participants are exercising
choice: 58% of organisations providing services under the NDIS have had one or
more clients leave them to go to an alternate provider. At this stage most participants
are moving to other existing not-for-profit providers (38%). There is also some
National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
movement to new not-for-profit providers, sole practitioners (13%) and for-profit
providers (8%).
Graph: NDIS participants changing their provider: Where did they go?
Approach to setting price limits for attendant care
Price charged
For the bulk of services provided under the NDIS, providers charge at the price cap.
This price commonly does not meet the full costs of service provision and is not
sustainable.
It is worth pre-empting comments about some providers being willing to accept lower
prices for providing attendant care from insurance bodies such as the Transport
Accident Commission (TAC). The volume of this work is relatively small, which
allows providers to accept low prices that cover the marginal cost of service delivery
and to fund overhead costs from other sources. It would not be a sustainable pricing
model for the NDIS.
Comments on the current price limits
Service providers are losing money on one-to-one supports, a situation which cannot
continue. The NDIS hourly rates are significantly lower than the prices which
organisations charge for similar work assisting older people to remain living at home.
Some providers report a reluctance to take on new participants with complex needs
(in all service types). The NDIS has higher prices for complexity but they don’t cover
the additional staff supervision and debriefing, training and skill levels required to
support participants with complex needs (which may include challenging behaviours
or medical needs). Without a price increase, high-needs participants will be at risk of
National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
not getting the supports they need. A third and higher price level for participants with
complex support needs should be introduced.
The NDIA makes some allowance for participants cancelling shifts with little notice or
not showing for an appointment, but it underestimates the financial impact on
providers of persistent cancellations. In too many circumstances, providers are not
able to claim for payment.
The price for short-term accommodation is a flat rate which fails to reflect the higher
cost of labour during evenings, at weekends and on public holidays. In addition,
there is no recognition of the capital costs associated with support (short-term
accommodation support does not attract the Specialist Disability Accommodation
payment). The NDIA expects the price to cover the provision of all food and
activities. A number of providers are currently considering ceasing short-term
accommodation support, which would have a major adverse impact on some families
and carers.
Comments on setting price limits based on the efficient cost of provision
The NDIA has stated that the current prices for one-to-one support are higher than
the ‘efficient price’. NDS strongly rejects this assertion.
Impact on the quality and amount of attendant care provided if the price limit
was:
 not changed in the next price guide;
 increased in the next price guide; or
 decreased in the next price guide?
Failure to increase prices would exacerbate the risk of market failure. To succeed,
the NDIS needs existing (mainly not-for-profit) providers to invest in growth and
transition. Most lack the financial capacity to do this. Traditional funding
arrangements have prevented providers from building the operating capital needed
for NDIS transition and growth, and their capacity to access finance is limited. Low
NDIS prices compound the problem.
New market entrants, including for-profits, can’t be relied on to bridge this supply
gap. For-profits and not-for-profits operate in the same markets, pay the same
salaries and on-costs and are equally affected by workforce constraints. New
entrants of any type will have to invest to build assets and market share. Prices and
profit margins must be sufficient to ensure they recover this new investment as well
as provide for sufficient long-run return. For-profit providers will likely demand a
higher minimum rate of return than not-for-profit providers.
Demand for supports is growing rapidly. 71 per cent of service providers report
increased demand for their services over the last year (compared with 61% in 2014)
and 75% expect demand to increase further in 2016-17.
Despite expecting demand for their services to grow in the year ahead, only 60% of
providers are planning to increase the scale and range of services they provide. This
is down from 68% in 2015. Only half (53%) expect to be able to satisfy demand. Of
the half that won’t be able to meet demand, only 13% expect clients’ needs to be
fully met by another organisation. One in five organisations (22%) believes that the
National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
clients they turn away will receive no service at all and 43% believe that other
providers will only partly meet their needs.
67% of providers report being “worried that we won’t be able to provide services at
the prices being offered under the NDIS.”
Concerns about the workforce for attendant care
While barriers to entry to disability support work are relatively low and lead times for
skills development are relatively short, workforce shortages are already present.
47% of respondents to NDS’s 2016 Business Confidence Survey reported that they
have difficulty recruiting disability support workers (see graph below)1. This is despite
the fact that the majority of respondents were not yet operating within the NDIS.
Increasingly, organisations are being asked to recruit to meet the preferences of
individual participants. This adds to recruitment costs and lessens the ability to offer
full-time employment. In addition, more staff select work that offers predictable shifts
(such as in-home support rather than community participation). If this trend
continues, providers will find it difficult to fill community participation roles.
Population ageing has several effects:
 greater demand for supports as participants age or newly acquire disability
 as carers age they will be able to provide less informal support necessitating the
need for formal supports
 as the population ages, the aged care sector will require additional workers,
intensifying the competition for workers
The disability sector has a slightly more balanced age profile than adjacent sectors:
 NDS workforce data from September 2017 shows than 43% of the direct support
workforce were aged 25–44, similar to the Australian workforce average of 45%
 the average organisation has 21% of its workforce aged 55 and older
Nevertheless, as 70% of the workforce is female, and the average retirement age for
women in Australia is 60.4 years2, the disability sector has a sizeable segment of its
workforce close to retirement at the same time as demand for workers is growing.
While not uniform across the country, employment growth is currently exceeding
previous growth rates (NDS data suggests it is growing at approximately 3% per
quarter, steady for the last four quarters). The employment growth rate outside
organisational providers3 is not known.
Ease or difficulty in recruiting staff in the 2015-16 financial year
NDS State of the Disability Sector 2016, p. 38, with data taken from the NDS’s
2016 Business Confidence Survey of 549 disability service providers
2 Australian Bureau of Statistics, Retirement and Retirement Intentions, Australia,
July 2014 to June 2015, Cat. No. 6238.0, average age at retirement for persons who
have retired in the previous five years
3 That is, amongst workers being directly employed by NDIS participants and people
working as independent contractors or through agencies.
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National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
The current allowance within the pricing model for training is only 2 days per year
FTE. Given that most support workers are employed part-time, this translates into
about 1 day of training per worker. This is insufficient to deliver high-quality supports
under the NDIS.
Low NDIS prices also restrict training for working with people with challenging
behaviours and are a barrier to creating jobs that would help alleviate professional
shortages, such as allied health assistants and peer workers.
Assumptions for estimating prices for attendant care
Comments on assumptions underpinning the price of attendant care
NDS is pleased to see that the NDIA is open to reconsidering the assumptions that
underpin the reasonable cost model used for calculating prices for one-to-one
support. Several of the assumptions are problematic. Comments appear in the table
below.
Component
Base hourly
rate
Comments
 The pay rates for both employees and managers/supervisors
are lower than the average pay rates in the sector.
 Many disability support workers are paid at rates more closely
aligned to level 3 and managers/supervisors at rates aligned to
levels 4 or 5.
National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
Component
Employee
contract type
Comments
 While 60% of staff are employed on a full-time or permanent
part-time basis, 40%4 are casual; this figure is expected to
grow in order to meet participant demands for supports at
irregular times.
 The hourly rate should factor in compensation in recognition of
the short engagements characteristic of personal support,
since these will either be worked by casuals with a 25%
loading or attract shift break penalties (if worked by a
permanent employee).
 In the current review of the SCHADS Award, NDS has argued
for more flexibility in the definition of ‘permanent part-time’
(currently the employer and employee need to agree the days,
hours and start and finish times); the Fair Work Commission
has yet to decide on this.
Shift and
other
allowances







Personal
leave


Prices don’t make allowance for the payment of permanent
staff for public holidays or to back-fill their rosters on these
days.
A worker rostered for more than 4 hours on 10 or more
weekends is entitled to 5 weeks’ annual leave, which is not
factored into prices. This is not just a rostering issue; it reflects
participant preferences.
Currently any shift finishing after 8.00 pm attracts a 12.5%
penalty for the whole shift (even if a broken shift). This is not
factored into prices.
Shifts finishing after midnight or starting before 6.00 am attract
an allowance of 15%. This is not factored into prices.
Staff working sleepover shifts attract an allowance which is
4.9% of the standard rate in the Award, currently $42.97. This
rate is likely to increase as a result of the current review of the
Award.
Shifts that include a sleepover generally also attract the 15%
night shift loading because the shift finishes after midnight. The
loading applies to the whole shift. When activity occurs, the
shift is paid at overtime rates.
Other employee costs commonly compensated are meal
payments, telephone allowances in recognition of staff mobility
(these two are not currently in the Award) and travel allowance
of 76c/km. These are not factored into prices.
The Reasonable Cost Model allowed 5 days per year for
personal leave. This is grossly inadequate for a workforce that
has close contact with clients (APS average is 12 days).
The allocation for personal leave should be increased to 10
days per year to better reflect actual usage (and the
This is taken from NDS’s regular workforce survey of organisations which employ
about 30,000 staff.
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National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
Component
Comments
entitlement under the Fair Work Act 2009). A significant
number of employees, notably in Victoria, have Enterprise
Agreements with 15 days of personal leave.
Annual leave

While 4 weeks’ annual leave is common for disability support
workers, a substantial proportion of employees receive 5
weeks (as a result of shift entitlements or because they work
more than 10 weekends a year) or 6 weeks (because that was
a condition of a previous Award – such as the ATSS Award in
Victoria – which is now reflected in an Enterprise Agreement).
Long service
leave

Actual long service leave attainment for the disability sector
has not been measured, but anecdotally is higher than the
17.98% Australian average. This should be measured.
Some workers have a long service leave entitlement greater
than 8.67 weeks after 10 years (e.g. 13 weeks after 10 years of
service is not uncommon in Queensland and Victoria).

Administrative 
time

Travel


Management
costs



Overheads,
allowances

The assumption that 95% of support worker time is billable is
unachievable: it does not allow adequate time for compulsory
reporting, organising transport, communicating with other
providers and informal carers, undertaking training and
receiving supervision.
When the service is based in a facility, 90% would be a more
realistic target for support workers but this should be lower for
workers supporting participants within the community or at
home (these workers invariably have periods of non-billable
time as they respond to the flexibility that clients request).
There is no allowance for motor vehicle costs and fuel for
travel between participants.
Many providers are currently reviewing transport provision as
the costs of providing it cannot be recouped. Withdrawal of this
transport option would have an adverse impact on participants.
The assumption of a span of control for managers of 1:15 FTE
is aggressive, particularly in a sector with a high proportion of
part-time and casual workers who are increasingly working in
isolation and in uncontrolled environments.
A span of control of 1:10 FTE would be a more appropriate
level of supervision and support.
Workers supporting people with complex needs require greater
levels of supervision, practice leadership, debriefing and
support. The span of control for these workers should be lower
again.
The 15% allowance for all overheads falls short of sector costs.
During transition, NDS recommends that the hourly cost model
National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
Component
and
adjustments
Comments
use an average overhead cost for the sector rather than
impose an arbitrary percentage.
 The pricing model makes no allowance for staff turnover (to
accommodate the costs of recruitment, induction and the
additional supervision, training and support of new staff).
 On occasions, many organisations in the sector need to use
agency staff, particularly to cover circumstances where not to
fill the shift would be a risk to the participant. The extra cost of
agency staff is not included in the pricing model.
 A single price list across Australia with loadings only for remote
and very remote areas is a crude approach to pricing that fails
to acknowledge the high costs of delivering supports in other
areas - such as Darwin - and establishes prices that will not
sustain current providers or attract new suppliers.
 NDS recommends that price setting in thin and high-cost
markets be reviewed urgently.
Margin

The margin allowance of 5% of total costs is the minimum that
the sector would accept as reasonable.
The NDIS needs to be delivered within a $22 billion per annum budget, but it can’t be
delivered on current pricing. Inadequate pricing threatens to erode service quality,
cause market failure and reduce consumer choice. While the NDIA needs to retain
control over the total budget, centrally determining prices that adequately reflect the
diversity and complexity of circumstances in which services are provided is
inherently difficult.
NDS believes that there would be merit in testing a relaxation of price controls in
community participation and group-based activities (both within a centre and in the
community). NDS would be keen to work with the NDIA on developing such a test; it
would require the establishment of clear business rules, safeguards and monitoring
mechanisms.
Simplification of shared care price controls
Changes to the structure of price controls
NDS is interested in options to simplify ‘shared care’ price arrangements but
stresses that more work is required before we could support the current proposal,
not least because it doesn’t include actual prices.
Deciding whether group-based activities are centre-based or in the community and
determining the appropriate staff ratios can be complex. Participants may be
supported at a centre for a period of time prior to participating in a community activity
(by themselves, with the support of a worker, or in a group) or in a centre-based
group. In some situations they may be supported with a ratio of 1:3 (particularly
when centre-based) but may need 1:1 support in the community (as they require a
worker to push their wheelchair or to keep them safe—even if they are out with other
National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
participants and staff). They may come and go frequently from a centre, using it for
its accessible toilets (particularly its change table or hoist), for mealtime assistance,
or as a place of shelter or rest. For mealtime assistance they may require 1:1
assistance; 2:1 for toileting; and 3:1 for an activity.
Additional challenges arise because of cancellations: one cancellation within a group
means that the cost of providing support is not met by the remaining participants.
NDS is concerned that the costs of using a centre are not covered by existing prices.
Many participants need to be away from their home for a substantial number of
hours each week (they may not be safe to be alone at home while parents work or
their supported independent living may not be staffed during the day). It is often not
feasible for them to move from community activity to community activity (and they
may not be able to afford to do so) or they may need the use of an accessible centre
or require periods of intensive support.
Associated with this is the need for further work on developing prices for groupbased community participation. Total costs increase as the group size increases (for
example, the use of a more skilled staff member, time to negotiate arrangements
with participants, coordinating transport, incident reporting, and reporting back to
family or others).
NDS is keen to work with the NDIA on a simplified pricing model for shared supports.
Other updates
Comments on other changes to rules and controls
Group community participation supports: In principle, future claiming should
reflect actual support worker-participant ratios. However, any change must be
preceded by comprehensive modelling and testing with providers. It would be
untenable, for example, simply to divide the 1:1 rate by the number of participants in
a group. To do so would overlook the impact of group dynamics on the costs of
support. The broad proposals in the discussions paper to re-structure ‘shared care’
prices and recognise that ratios can fluctuate during the course of a day should be
developed and tested with the sector before changes are made to the current
arrangement which allows the 1:2 rate to be applied to larger groups.
Community participation supports (travel): Access to transport is an essential
enabler of community participation. The sector would welcome clear rules around the
provision of transport services and how to claim for these services. NDS is hearing
increasingly that providers cannot cover the costs of transport services so are
considering withdrawing them (and disposing of assets). If this happens, participants
unable to use public transport would be disadvantaged and the NDIA would face the
escalating costs of taxi use.
Short-term accommodation: NDS is pleased that the NDIA is considering changes
to the flat price for short-term accommodation. Without changes, the availability of
this support will decrease, impacting on participants and their families. We support:
prices differentiated by participant support requirements; higher rates for weekends
National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
and public holidays; clearer definition of expected base level support to be provided;
and the ability for providers to claim (or charge participants) for additional supports.
Consideration must be given to introducing a SDA-like payment for the provision of
short-term accommodation houses.
Therapy services (provider travel): The current limitation on therapy travel costs is
hindering the provision of therapy in natural settings. NDS urges the NDIA to
increase the travel limit and encourage participants/families to negotiate preferred
arrangements directly with therapy providers.
Attendant care and therapy cancellations: Late cancellations or ‘no shows’ result
in large costs being borne by providers (with no cost being borne by the participant
and only some by the NDIA through the existing cancellation policy). There needs to
be a fairer cost-sharing arrangement. NDS urges the NDIA to work with NDS to
develop and trial a cancellation policy for therapy services (it should be tailored for
these services and participants).
Price banding
Advantages and disadvantages of price banding
Price banding is a concept with potential value. It could be used as a step towards
price deregulation and would allow participants and providers more latitude in
negotiating the how when and what of support delivery.
However, the proposal cannot be assessed in the abstract. NDS would need to know
that a benchmark price was not going to be set below the real costs experienced by
most organisations to deliver a support (thus giving participants an unrealistic idea
about the costs of their supports); noting that providers would be able to negotiate a
price below benchmark.
NDS would welcome the opportunity to do further work on this proposal, with a view
to piloting it over the coming financial year.
National Disability Services
2017 Price Controls Review: Submission on NDIS Pricing Arrangements
April 2017
Contact:
Dr Ken Baker
Chief Executive
National Disability Services
Ph: 02 6283 3203
Mob: 0409 606 240
[email protected]
National Disability Services is the peak industry body for non-government
disability services. It represents service providers across Australia in their work to
deliver high-quality supports and life opportunities for people with disability. Its
Australia-wide membership includes over 1100 non-government organisations which
support people with all forms of disability. Its members collectively provide the full
range of disability services—from accommodation support, respite and therapy to
community access and employment. NDS provides information and networking
opportunities to its members and policy advice to State, Territory and Federal
governments.