I need to know this because:

• This report summarises the financial state of the disability sector according to the data of 180 organisations studied.
• It considers the current capacity of the sector to deal with the implementation of the NDIS.
• It looks to the future, considering how the disability sector can minimise risk and maximise its services under the NDIS.

A new study from Curtin University’s Not-for-profit Initiative and NDS’s Centre for Applied Disability Research (CADR) provides governments, disability service providers and the broader community with detailed information on the supply and sustainability of disability services in Australia.

It is the first report in a two-year study which will track the impact of the NDIS on the service sector as the reforms are implemented across Australia.

"The NDIS places high expectations on the capacity of the non-government disability services sector to grow rapidly," says NDS Chief Executive Ken Baker.

"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 NDIA, rather than on growth and innovation."

Findings of the report include that 43 per cent of disability service providers generate less than 3 per cent profit, suggesting that many disability providers will struggle to generate enough profit to invest in the growth, change and innovation required by the NDIS.

The research also found that while the median current asset ratio for the disability sector is 1.9 - in the healthy range for short-term viability - 16 per cent of organisations have a ratio of below 1, meaning they are at risk should their income decline or expenses increase rapidly. Over 15 per cent of organisations recorded a loss in the last financial year.

"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," says Dr Baker.

"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."

Curtin University Professor David Gilchrist says that while it is encouraging that 60 per cent of respondents in the report rate their financial strength as 'strong' or 'very strong,' organisations need great support to minimise risk.

"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," says Prof Gilchrist.

"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."

On Friday, the Disability Reform Council agreed to 'enhance its oversight of the developing market for the NDIS.' Dr Baker says 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," he says. NDS has raised this matter with government.

Dr Baker says, "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."

Read the report below or access our infographics.

Publication: DSO Financial Sustainability Report

  Download publication (1.1MB)   Download Accessible publication (363.6KB)