Disclosure Log

Document 14 - FOR OFFICIAL USE ONLY

Pricing Reference Group | Item: [Item Number]

Prepared By David Cullen Chief Economist

Date: September 18th, Year

Matter For Noting:

Efficient Cost Model

Prepared-by: David-Cullen-Chief-Economist Purpose: The-Pricing-Reference-Group-(PRG)-notes-the-efficient-cost-model-for-disability-support-workers-paper,(attached),which-will-shortly-be-considered-by-the-board-for-publication. Recommendations: THAT PRG NOTE THE EFFICIENT COST MODEL FOR DISABILITY SUPPORT WORKERS. Background: THE-AGENCY-HAS DEVELOPED AN EFFICIENT-MODEL-WHICH-ESTIMATES-THE-FULL-COSTS,-TO-AN-EFFICIENT PROVIDER-,OF ENGAGING WORKERS COVERED BY THE SOCIAL COMMUNITY HOUSING AND DISABILTY SERVICES (SCHADS) AWARD.The-main-use-of-the-model-is-develop-price-limits-for-disability-support-workers(DSW-engaged-in-providing-relevant-supports-principally-assistance-with-daily-care-and-assistance-with-social and-community-engagement.) However,the-workings-of-the-model-have-never-ben-made-pubically-available.-The Board recently-decided-that-a-paper-describing-the-methodology-input-parameters-sources-and assumptions be published in order to support transparency. Attachments: national_disability_insurance_scheme_2019_efficient_cost_model_for_disability_support_workers

Disclosure Log

Document: Document

Title:

National Disability Insurance Scheme - Efficient Cost Model for Disability Support Workers

June 2019 Page redacted out of total pages.

Disclosure Log

Copyright

Copyright in the information contained in this Cost Model is owned and protected by the National Disability Insurance Scheme Launch Transition Agency (National Disability Insurance Agency).

Use of National Disability Insurance Agency copyright material

The material in this report with the exception of logos, trademarks, third party material and other content as specified is licensed under Creative Commons CC NC licence version 3.0. With the exception of logos, trademarks, third party material and other content as specified, you may reproduce the material in this Cost Model provided you acknowledge the National Disability Insurance Agency as the owner of all intellectual property rights in reproduced materials using ‘© National Disability Insurance Scheme Launch Transition Agency 2018’ do not use for commercial purposes Reproduction any Creative Commons material subject to conditions available creative commons site full legal code Material Terms we DSW ECM NDIA NDIS Q&SC Further further pricing scheme can be found at the NDIS website

Disclosure Log

Contents

• Introduction … page: 5

DISCLOSURE LOG

This disclosure log relates specifically to MR25/01967 FOI request number 24/25-2242.

The document contains information that has been disclosed in accordance with Section(s):

• s22(1)(a)(ii)

It pertains directly or indirectly and may include:

• Names of individuals involved,
• Specific dates related events occurred,
• Locations where certain activities took place (e.g., addresses).

Page: 103 out of a total possible pages indicated as being within range from 1 - X.

Disclosure Log

Introduction

One of the principal objectives of the National Disability Insurance Scheme (NDIS) is for people with disability to exercise choice and control over how, and with which providers, they spend their available budgets. Prices reflect participants’ choices based upon market prices; thus reflecting preferences placed differently across various types of support services provided within NDIS budget constraints; such aggregation signals quantity and mix suppliers should provide, purchasing power also affected as higher prices reduce what can be purchased from a given budget; total costs of NDIS rise due increased spending leading towards financial sustainability challenges; allocation resources accordingly impacting production levels relative other sectors; incentives offered through deregulation include entry into markets, upskilling/right-skilling opportunities, innovation encouragement & improvements service quality/outcomes. as markets become more effective, expected that NDIA will intervene less but may not feasible everywhere or at same time point depending on sector development stage currently varies approach between:

• No regulation in highly competitive areas such transport industry
• Price limits imposed, maximum allowable price paid per type supported used significantly where still developing like attendant care
• Quotable supports: Participants obtain quotations verifying fair pricing especially when specialized/complex needs exist e.g. assistive technology/supported independent living bundles quasi-outcome purchases allowing greater flexibility by provider adjusting outcomes against input cost faced.

Disclosure Log

Disability Support Worker Efficient Cost Model

This Chapter sets out the assumptions and methodology of the Efficient Cost Model (ECM) that the NDIA uses to estimate the costs to disability service providers of employing Disability support Workers(DSWs )to deliver supports throughthe NDIS.The ECM estimates the cost delivering a billable hourof support taking into account allcost associated with every billablehour including: base pay; shift loadings holidaypay salaryon costs supervision; cost utilisation(non-billable activities); corporate overheadsand margin. TheNDI A recognises thatproviders have toe employ D SWswith different skill levelsand levelsof experience tom eet then dierent needs o f participants.It therefore has diferentsetsofof three types workers referred as:

• Standard or Level DS W s ;
• High IntensityorLevelDSWs, an d
• VeryHigh intensityOrLeve l3D SWS .

Applicable Industrial Award The national award for DSW is Social Community Home CareDisability Services IndustryAward 2010.’TheN DI Are cognisesthat someare employed under Enterprise Bargaining Agreements(EBAs).However these EB As haveto leave worker no worse off overall than they would beunder relevant Aw ard in general any additional benefits offered by EBA soverhe Awardhave been voluntarily agreed provider and are often offsetby productivity gains. Th NDIA thereforconsiders conditions set outin SCHADSA ward tobe appropriate foundation ECM Note the nomenclature of Le vel I DSW ,L ev elIDSW L evel3DSW usedECM should not confused with classificationworkersSCHADSAward.

Base Pay Table sets out ECMS assumptions respect base payof DSWs’

table: NDIS Levels Assumed ClassificationPay Rates classification| assumed | aw ardpay dateDecember 2018 level (Standard) D SW| level 2.4/3.| $2761 highIntensity DS W| leve l3.1|$29,74

Disclosure Log

Shift Loadings

Table (\ref{tab:shift-loadings}) sets out ECM’s assumptions regarding shift loadings. These are in accordance with SCHADS Award and apply uniformly across all DSWs & supervisors within ECMS. The award also provides workers compensation via annual leave loading at a rate equivalent to shifts they would otherwise have taken, as per the SCHADS Award; however no other allowances exist.

Disclosure Log

Level	DSW
Allowance for Public Holiday leave
a. No hours in year (hrs/yr)	76
b. Loading	0%
c. Proportion taken	100%
d. Cost	$$345$$
e. Cumulative cost per hour after costs	$ \ $33 . \text { 1 } / h r
note: Columns may not sum due to rounding.

Salary On-costs

The ECM recognises that providers incur other costs related salaries, including:

• Superannuation at statutory of base salary, including leave; and Workers compensation insurance at %of base salary which is higher than the national average for Health Community Services Sector. The ECM does not provide payroll tax as most jurisdictions exempt smaller organisations from it. As Table shows on-costs increase by over the base salary rate.

Disclosure Log

Supervision costs

The ECM recognises that DSWs require support and supervision and assumes that supervisors have the same shift loadings, leave entitlements and salary-on-costs as the workers they manage; higher skilled workers need more highly-skilled supervisors.

• The span-of-control ratio assumed in these calculations: worker-to-supervisor = 1 : 11. The average reported across all sectors from AbleInsight Benchmarking Survey is a ratio between supervisor and number managed at approximately 9 : $\mathbf{1}$ (see Table \ref{tab5}). As shown on table below: cost per billable hour increases to an extent depending upon level of disability service provider (DSW) being considered.

Agency.

Insurance

Disability

National

Released information:

The act that was

Disclosure Log

Margins

The ECM currently assumes a 2% margin on other costs. This equates to rate return against working capital equivalent three month’s wages and entitlements. as Table illustrates margins together increase cost employing permanent Standard DSW week day base salary rate impact higher (“) Very high Intensity”) DSW. table: Impact Margin Cost per Bill Hour DSW cumulative cost hour before margin $4958$5362$5632margin as share others costs %cost marginal $(cumulative cost after margin $5057$5469$5745Cumulative increase from standard hourly rate%

Pricing Model

In order to set price limits for 2019–20, the NDIA indexed the results of the Efficient Cost Model for costs on June 30th year 6 years ago for expected wage inflation over . The assumptions underlying indexation are in Table.

Indexation arrangements

Component	Value
Labour Costs	Fair Work Commission Increase Minimum Wage July 4 years and a half months ago Equal Remuneration Order December 5 days before Christmas Total Expected increase labour cost

Capital Costs CPI Labour Share Of Costs Total Indication (Weighted Average)

Table shows ECM results support each DSW level shift Indexed Price Limits without Temporary Transformation Payment.

Shifts

| Weekday Saturday Sunday Public Holiday Afternoon Night Shift Weekday Saturday Sunday Public Holiday Afternoon Night Shift Weekday Saturday Sunday Public Holiday Afternoon Night Shift | Level 1 Level 1 Level 1 Level 1 Level 1 Level 1 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 3 Level 3 Level 3 Level 3 Level 3 | $50.57$69.$80.45$113$.55.80$56.$$54$$75.24$97.$$122$.60.34$61.47$57.45$79.02$102.$.63.38$64.56 | $52.85$72.|$94|.|$118||$58.31|$59.40|$57.15|$78.63|$102.24|$127.97|$63.06|$64.24|$60.04|$82.58|$107.37|$ ext{redacted}$