2023-24 Annual Pricing Review Report

June 2024

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Acknowledgement

The National Disability Insurance Agency (NDIA) acknowledges the Aboriginal and Torres Strait Islander people of this nation and the Traditional Custodians of the lands across which our Agency conducts our business. We pay our respects to the custodians of the land on which we work as well as their ancestors and Elders, past, present and emerging.

The NDIA is committed to honouring Aboriginal and Torres Strait Islander Peoples’ unique cultural and spiritual relationships to the land, waters, and seas and their rich contribution to society.

Copyright and use of the material in this document

Copyright in the material in this document, with the exception of third-party material, is owned and protected by the National Disability Insurance Agency

The material in this document, with the exception of logos, trademarks, third party material and other content as specified is licensed under Creative Commons Attribution Non-Commercial No Derivatives (CC BY NC ND) licence, version 4.0 International. You may share, copy and redistribute the document in any format. You must acknowledge the National Disability Insurance Agency as the owner of all intellectual property rights in the reproduced material by using ‘© National Disability Insurance Agency 2023’ and you must not use the material for commercial purposes.

Reproduction of any material contained in this document is subject to the CC BY NC ND licence conditions available on the Creative Commons Australia site, as is the full legal code for this material.

The National Disability Insurance Agency expects that you will only use the information in this document to benefit people with disability.

Terms that we use

Acronym	Meaning
ABS	Australian Bureau of Statistics
APR	Annual Pricing Review
CPI	Consumer Price Index
DRC	The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability
DSW	Disability Support Worker
FWC	Fair Work Commission
NDIA or Agency	National Disability Insurance Agency
NDIS or Scheme	National Disability Insurance Scheme

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Acronym	Meaning
NDIS Commission	National Disability Insurance Scheme Quality and Safeguards Commission
SCHADS Award	Social, Community, Home Care and Disability Services Industry Award 2010
SIL	Supported Independent Living
WPI	Wage Price Index

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Table of Contents

• 2023-24 Annual Pricing Review Report
  • Executive summary - 5
  • Introduction - 14
  • Domestic economic conditions and the care economy - 19
  • Disability Support Worker related supports - 37
  • Therapy Supports - 63
  • Support Coordination - 94
  • Short Notice Cancellation Policy - 111
  • Feedback from the Participant Consultation Paper - 125
  • Appendix A - Feedback from the Provider Consultation Paper - 136

Executive summary

The National Disability Insurance Agency (NDIA) monitors and reviews National Disability Insurance Scheme (NDIS) price control framework and other market settings to determine whether they are appropriate and reflect the current market conditions.

Annual Pricing Reviews (APRs) are an important part of the monitoring and review process. This requires the NDIA to examine, through engagement with participants, providers and community and government stakeholders, and targeted research, whether the NDIS’ existing price control framework (pricing arrangements and price limits) continues to be appropriate or should be modified.

As part of the 2022-23 APR, extensive consultations with participants, providers and other stakeholders were completed, including:

• Publishing a Consultation Paper and completing analysis of the 912 submissions received.
• Consultations with other government insurance and funding schemes.
• Consultations with the Pricing Arrangements Reference Group.
• Consultations with the Pricing Interdepartmental Committee.
• Consultations with the Department of Veterans’ Affairs and the Chief Allied Health Officer.

A summary of submissions to the Consultation Paper can be found in Appendix A and throughout the report.

NDIS Review

On 7 December 2023, the Minister for the NDIS released the independent NDIS Review. The report maps out 26 recommendations with 139 actions to help restore trust, ensure the Scheme’s sustainability, and deliver a better NDIS experience for participants. Together with the Government, the NDIA will take the time to carefully considered all recommendations and ensure that reforms to be done in a measured and considered way.

The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability

The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability (DRC) was established in April 2019 in response to community concern about widespread reports of violence against, and the neglect, abuse and exploitation of people with disability. The final report was tabled on 29 September 2023. The report consists of 12 volumes outlining 222 recommendations.

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recommendations on how to improve laws, policies, structures, and practices to create a more inclusive and just society. A Government taskforce has been established to consider the recommendations, with the NDIA represented within this group.

Disability Support Worker related supports

The provider market has demonstrated significant growth and flexibility to meet increasing demand. In the six months to December 2023, 44% (283,406) of active NDIS participants accessed Disability Support Worker (DSW) related supports, a 12% increase from the same period in 2022. This period also saw a 21% increase in the number of active providers, totalling 122,857. Financially, payments for DSW-related supports during this timeframe amounted to $13 billion, accounting for 64% of the total $20.4 billion in payments made to providers, which reflects a 27% growth in DSW-related support payments year-over-year.

This significant growth within the market is underscored by the performance between different provider categories: registered providers experienced a slight decline in their numbers but an increase in payment amounts, while unregistered providers saw a substantial increase in both numbers and payment amounts. This highlights a growing market that continues to meet increasing demand.

The NDIA uses the DSW Cost Model to set price limits for DSW-related supports. This model is designed to reflect the costs of a reasonably efficient provider would likely incur per billable hour of support. It includes base salary and shift loadings aligned with the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award), direct on-costs such as superannuation and leave entitlements, operational overheads like supervision and training, and corporate overheads which account for essential Human Resources and Information Technology.

The SCHADS Award sets the minimum standards for DSWs, stipulating wage levels and conditions that are foundational in establishing NDIS price limits for DSW-related supports in conjunction with broader market trends and regulatory requirements. The multiplicative nature of the model means that when the NDIA passes on increases to minimum wages, as set by the Fair Work Commission through the SCHADS Award, it flows through to the final output of the model. This implies that wage changes and other cost components flow through the model, partially reflecting challenges of doing business in the current economic environment even in the absence of direct adjustment to the overhead and margin parameters.

Feedback received from the sector and peak bodies highlights challenges in alignment to evolving economic conditions and provider realities. Stakeholder feedback has suggested a potential underestimation of corporate and operational overheads, such as insurance and compliance costs given the model is currently based on previous benchmarking survey results. The feedback received through the ndis.gov.au 2023-24 Annual Pricing Review

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APR consultation and ministerial correspondence, has raised concerns that the current price limits may not fully accommodated the delivery of more specialised and complex supports for some NDIS participants, which may restrict providers’ ability to recover adequate costs.

The NDIA is actively enhancing the DSW Cost Model by integrating more robust and diverse data sources. This includes partnerships with industry stakeholders on benchmarking surveys and leveraging mandatory financial reports submitted to the Australian Charities and Not-for-profits Commission (ACNC). On balance, these new data offer insights of providers financial performances from different perspectives, which ultimately enriches the decision-making process. This is important so that the varied and evolving conditions of the NDIS provider market are considered.

Analyses in this report highlights that there is considerable variability in financial performance among organisations and the persistent tightness in the care and support workforce. In the absence of representative data of the NDIS provider population, the NDIA does not have sufficient evidence to support a structural change to the DSW Cost Model currently.

It is noted that pricing reform work is happening across the Australian Government. This includes the Department of Social Services’ led ‘Pricing and Payments Framework’ and the work to be undertaken by the Independent Health and Aged Care Pricing Authority (IHACPA) to reform NDIS pricing arrangements, including reviewing existing pricing approaches and developing a pricing data strategy.

Therefore, it is considered appropriate to pass on minimum Award wages and national employment standard changes to superannuation at this time, which include an increase in employer superannuation contributions from 11% to 11.5%, effective from 1 July 2024.

Recommendation 1

The NDIA, subject to any specific recommendation arising from the current Annual Pricing Review, should increase the price limits for supports that are determined by the NDIS Disability Support Worker Cost Model from 1 July 2024 to reflect any changes in the minimum wages specified in the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award) following the Fair Work Commission’s Annual Wage Review and any increase in the Superannuation Guarantee Charge.

1.2.1 Temporary Loading

The temporary loading of 2% was introduced on 1 July 2022 to the DSW Cost Model as a short-term measure to assist providers in managing the increased costs associated with COVID-19 and changes stemming from the SCHADS Award changes. As COVID specific supports continue to wane in other sectors in the economy, it is recommended that this temporary measure to end as scheduled as recommended in the 2022-23 APR.

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Recommendation 2

The NDIA should cease the temporary loading applied to the NDIS Disability Support Worker Cost Model from 1 July 2024.

Other labour related supports

The NDIA recognises there are supports that are not within the scope of the 2023-24 APR. Notably, nursing supports fall into this category, alongside other core and capacity-building supports like personal domestic cleaning and house or yard maintenance. !

Given the recent aged care reforms, which include up to a 25% wage increase for aged care workers and potential future adjustments to the Nursing Award, it is crucial that these supports remain in line with their applicable markets. Failing to adjust the price limits, particularly nursing supports, could risk the adequacy of support for NDIS participants. Therefore, it is proposed that the price limits for these supports be increased, following the methodology used in previous years’ indexation. It should be noted that capital items are excluded from the APR and is addressed by a separate process.

Recommendation 3

The NDIA, subject to any specific recommendation arising from the current Annual Pricing Review and any future reviews, should increase the price limits for nursing and other supports, not covered by Disability Support Worker-related supports or Capital supports, on 1 July 2024 in line with the weighted movement over the previous twelve months in the ABS Wage Price Index (Australia, total hourly rates of pay excluding bonuses) and the ABS Consumer Price Index (All Groups, weighted average of eight capital cities) over the 12 months to the March Quarter immediately preceding the

• This does not include Plan Management supports.

Therapy supports

The Australian therapy market encompasses a wide array of services provided by allied health professionals, who are typically university-educated with specialised expertise in preventing, diagnosing, and treating various conditions and illnesses. While the NDIS forms an important part of this landscape, allied health services extend beyond NDIS funding. These services are also accessed through various other arrangements, including Medicare subsidies, private health insurance, where it is common for out-of-pocket payments to be made by the consumer, other government schemes, and the Department of Veterans Affairs (DVA).

The NDIS therapy market continues to expand significantly. In the six months to December 2023, 59% (379,296) of the total 646,449 active participants received therapy supports through their plans. During this period, the number of providers delivering therapy supports grew to 52,736, reflecting a 14% increase from the same period in 2022. Notably, payments made to unregistered providers increased by 60%, although registered providers still received the majority of payments - 65% or $1.3 billion of total payments. This demonstrates growth in both the provider base and financial volume within the therapy sector.

The NDIS therapy market operates in a manner that closely aligns with the characteristics of a deregulated, or private market, more so than other NDIS sub-markets. These price limits are closely linked to the dynamics of the private market, ensuring that NDIS pricing remains competitive and reflective of current service costs. Accordingly, other government schemes and the private billing market serve as suitable comparators to assess the appropriateness of the NDIS price limits.

The 2023-24 APR analysis of other schemes showed that while some have increased their pricing or funding levels, NDIS price limits remain consistent with the majority of therapies provided across these schemes. It is important to note that there is significant variation in therapy pricing and funding levels among different schemes.

The analysis of private billing rates for NDIS-related weekday in-room therapy services in the 2023-24 period offers detailed insights into the therapy market. The dataset, consisting of 1,791 observations, was compiled by the NDIA from provider websites across Australia. This sample size is derived from previous annual pricing reviews, ensuring continuity and comparability over time.

The sample reveals a wide distribution of therapy types, with physiotherapists, psychologists, clinical psychologists, and dietitians the most common observation. This diversity highlights the varied therapeutic needs catered to by the NDIS, reflecting the scheme’s comprehensive coverage. Such insights are vital for the NDIA as it aims to ensure that the NDIS price limits are competitive and equitable,

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aligning closely with the market rates to adequately support providers while ensuring affordability for participants.

Overall, the private billing rates analysis provides a crucial benchmarking tool for the NDIA, helping to align NDIS pricing structures with the market and ensuring the sustainability of therapy services under the scheme. These analysis indicates that NDIS price limits generally match or exceed the rates for most therapies nationwide. However, regression analysis highlights statistically significant variances among therapies, which could correspond to differences among therapy professionals such as in qualifications, skills, and experience.

1.3.1 Psychology

Review of the current price limits for Psychologists against private billing rates and other comparable government schemes, it is apparent that the current limits generally sit below the prevailing market rates.

Analysis reveals that the mean billing rate for psychologists exceeds the NDIS price limits in both state groupings, with a mean rate of $228.6 and $260.3 for Psychologists and Clinical Psychologists, respectively. Similarly, median billing rates for these professionals surpass NDIS limits, standing at $228.0 and $255.0. Moreover, the 75th percentile billing rates indicate that a significant portion of appointments exceeds NDIS price limits, highlighting a clear difference between market rates and NDIS price limits. This suggests that it is appropriate for the NDIS to increase price limits to better align with prevailing market rates and ensure fair compensation for psychology services.

Recommendation 4

The NDIA should increase the price limits for supports delivered by a Psychologist on 1 July 2024 in line with the weighted movement over the previous twelve months in the ABS Wage Price Index (Australia, total hourly rates of pay excluding bonuses) and the ABS Consumer Price Index (All Groups, weighted average of eight capital cities) over the 12 months to the March Quarter immediately preceding the indexation date (with an 80/20 weighting). Specifically, this should be for support line items: ‘Assessment Recommendation Therapy or Training — Psychologist (15_054 0128 1_3), ‘Early Childhood Supports — Psychologist (15_001_0118 1 3)’, and ‘Specialist Behaviour Intervention Support (11_022 0110 7_3)’.

1.3.2 Other Therapists

Review of the alignment of the NDIS price limits for other therapists against the private billing rates and other comparable schemes suggests a general compatibility between the NDIS price limits and prevailing market rates. In general, for most therapists, mean and median billing rates closely mirror the NDIS hourly price limits, which are set at $193.99 in most regions, suggesting that the current NDIS price

Support coordination

Support coordinators play a pivotal role in the NDIS by helping participants understand, navigate, and effectively use their NDIS plans to achieve their personal goals. These professionals tailor services to individual needs within the framework of participants’ plan budgets. Support coordination is categorised into three levels based on complexity and participant needs, with corresponding price limits set to ensure a balanced pricing model.

The support coordination market is experiencing significant growth, reflected in the number of providers and the volume of payments. From the first half of 2022 to the same period in 2023, there was an 18% increase in payments amounting to $531 million, demonstrating a growth in demand for support coordination. The market is characterised by a mix of registered and unregistered providers, underscoring a market that is decreasing in concentration.

Providers report a range of challenges, including the financial implications of compliance and registration, which influence their operational costs and pricing strategies. On the participant side, there is a spectrum of satisfaction levels with support coordination services. Positive feedback often highlights the crucial support in navigating NDIS processes, while criticisms tend to focus on issues like the high turnover of coordinators and inconsistency in service quality.

Feedback through the APR captured the complexities of the support coordination sector, reflecting both its critical role in enabling participant outcomes and the operational challenges faced by providers. The dynamic growth of the market, coupled with the feedback from stakeholders, suggests ongoing adjustments and evaluations are necessary to align the services with the evolving needs of participants and the operational realities of providers.

It is considered reasonable that Level 1 support coordination supports currently determined by the DSW Cost Model, continue to be done so, including any applicable changes that occurs for DSW supports.

Recommendation 6

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The NDIA should index the price limits for Level 1: Support Connection services and Psychosocial Recovery Coaches services in line with the indexation of supports determined by the Disability Support Worker Cost Model in recommendation 1 on 1 July 2024.

Analyses in the chapter highlights that whilst the market for support coordination continues to evolve, there is no evidence to suggest that supply is not meeting demand. In light of significant upcoming reforms recommended by the NDIS Review, which aim to enhance service integration and improve participant outcomes, there is a strong rationale to mitigate potential market disruptions during this transformative period. Any changes to pricing at this point of time would be up for further changes until the reforms in the intermediary sector settle. On balance, it is not recommended to change the price limits of Level 2 and Level 3 support coordinators to ease undue disruption.

Recommendation 7

In alignment with strategic outcomes from the NDIS Review and recognising the current period of significant reform, it is recommended that the NDIA maintain existing price limits for Level 2: Coordination of Supports and Level 3: Specialist Support Coordination.

1.5 NDIS short notice cancellation policy

The NDIS short-notice cancellation policy is designed to protect service providers from financial losses when participants cancel appointments within a 7-day window. Providers can claim up to 100% of the agreed fee if a participant cancels late or fails to show, provided certain conditions are met. These include having a pre-existing agreement with the participant, adherence to the NDIS Pricing Arrangements and Price Limits, and the inability of the provider to find alternative billable work for the affected staff. This policy aligns with the SCHADS Award, which supports fair labour practices and helps manage financial risks for providers.

There is a need to consider a balance in the short-notice cancellation policy for the market. One that allows providers sufficient ability to recover costs with incentives to work with the participants they are supporting to minimise the number of short notice cancellations that occur. Meanwhile, participants are given reasonable time to provide notice for cancellations considering unforeseen circumstances to minimise using NDIS funding to pay for supports they do not receive. This includes unexpected illness, urgent appointments, or changes in personal circumstances.

In the three years from 2020-21 to 2022-23, the costs linked to short notice cancellations nearly doubled, increasing from about $60 million to just under $120 million. This rise highlights the need for effective management of such cancellations. Additionally, therapeutic and early childhood supports, which account for 37% of all claims, are identified as the categories most affected by cancellations.

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Feedback on the cancellation policy from providers and participants indicates varying experiences. Providers note a diverse range of cancellation policies within the NDIS market, which can lead to confusion among participants, some of whom only understand the financial implications after being charged for a cancelled service. The diversity in policies reflects varying levels of understanding and implementation across providers. Participants have expressed concerns about the sudden need to cancel due to unpredictable circumstances such as illness or emergencies, leading to calls for more flexible cancellation practices that consider the unpredictable nature of participants’ lives.

Providers delivering DSW-related supports, may incur such costs when unable to redeploy employees to other work or set up a make-up shift for the employee. This is as these workers are generally under the SCHADS Award, which has a legislative requirement regarding client cancellations. This requirement is unique for employees engaged under the SCHADS Award in the care sector.

On balance, these observations underscore the operational and financial challenges presented by the NDIS short-notice cancellation policy. The policy aims to balance provider and participant interests, but the required costs and varied experiences suggest a need for continuous evaluation and adaptation to ensure it achieves its goals effectively and fairly.

Recommendation 8

The NDIA should retain the existing 7-day short notice cancellation policy for applicable supports determined by or derived from the Disability Support Worker Cost Model from 1 July 2024. Providers of Disability Support Worker supports must continue to make reasonable effort to find alternative billable work for the staff involved.

For non-DSW related supports (non-SCHADS related), such as therapy services, lack a standardised legislative or Award requirement for client cancellations. Through consultation and research conducted, there is a case that the maximum of 7-day policy may not be necessary for non-DSW supports. There appears to be a greater usage of a 2-day cancellation policy in the sector, particularly among therapy providers, which supports a potential for a shorter cancellation policy.

On balance, the NDIA believes there to be mechanisms and methods already being utilised by the sector to assist participants limiting cancellations which could make the reduction in notice period feasible.

Recommendation 9

The NDIA should adjust the 7-day short-notice cancellation policy for non-Disability Support Worker-related supports to two clear business days from 1 July 2024.

Introduction

Context

The National Disability Insurance Scheme (NDIS) was established in 2013 to support people with disability to pursue their goals, to help them to realise their full potential, to assist them to participate in and contribute to society, and to empower them to exercise choice and control over their lives and futures. The NDIS provides funding to eligible individuals (“participants”) so that they can purchase, in the open market, the disability related goods and services (“supports”) that they need.

The National Disability Insurance Agency (NDIA) monitors and reviews its price control framework and other market settings to determine whether they are still appropriate and reflect the current market conditions.

NDIS Review

On 7 December 2023, the Minister for the NDIS released the independent NDIS Review. The report maps out 26 recommendations with 139 actions to help restore trust, ensure the Scheme’s sustainability, and deliver a better NDIS experience for participants.

The Review’s recommendations included legislative reform to return the Scheme to its original intent and improve the experience of participants. This included legislation to improve eligibility and access as well as an early intervention pathway for children. Changes will be guided by good legislation and good plans for implementation — developed in partnership with people with disability and the disability community.

Together with government, the NDIA will take the time to carefully consider all recommendations of the NDIS Review including the development of legislation, NDIS process reform — all the way through to implementation.

The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability

The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability (DRC) was established in April 2019 in response to community concern about widespread reports of violence against, and the neglect, abuse and exploitation of people with disability.

The final report was tabled on 29 September 2023. The report consists of 12 volumes outlining 222 recommendations. It contains recommendations on how to improve laws, policies, structures, and practices to create a more inclusive and just society. A Government taskforce has been established to consider the recommendations, with the NDIA represented within this group.

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Pricing Reform

In the financial year 2024—25, the Australian Government has allocated $5.3 million to the Independent Health and Aged Care Pricing Authority (IHACPA), to work with Department of Social Services (DSS) and the National Disability Insurance Agency (NDIA), to undertake the initial work to reform the National Disability Insurance Scheme (NDIS) pricing arrangements.

The primary objective of this initiative is to enhance the efficiency and effectiveness of NDIS pricing structures. The initial work expected to conduct a comprehensive review of current NDIS pricing mechanisms, as well as develop a new pricing data strategy.

Annual Pricing Review decision making framework

The NDIA conducts regular, thorough assessments of its pricing framework and market dynamics through the Annual Pricing Review (APR), which integrates insights from the evolving Australian economic landscape, labour market statistics, and sector-specific conditions. This process is reinforced by stakeholder consultations and analyses of impacts from legislative changes, and market movements, ensuring data-driven and relevant pricing strategies for NDIS-related supports.

Figure 1: APR Conceptual Framework

Outcomes
Extensive consultation with internal and external stakeholders
Peer review through engagement with PARG and Pricing IDC
Consideration and analysis of current economic conditions
Research into comparable sectors or benchmarking where relevant
Research into scheme statistics
Research into business dynamism

Terms of Reference for the Annual Pricing Review

The APR acknowledges the comprehensive insights from the Independent NDIS Review and the Royal Commission into Violence, Abuse, Neglect and Exploitation of

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People with Disability (DRC). While these reviews offer extensive recommendations for systemic reform, this APR focusses specifically on non-structural adjustments to the current price settings. It aims to implement immediate, impactful improvements with the existing framework of pricing established in the NDIS Pricing Strategy 2019, ensuring ongoing supply of support and continuity of access to services for NDIS participants, while broader structural reforms are considered for future implementation by the Australian Government.

The APR will examine, through engagement with participants, providers and community and government stakeholders and targeted research, whether the Scheme’s existing price control framework (pricing arrangements and price limits) continue to be appropriate or if modification is required.

The APR will have an increased focus on participants, with a dedicated consultation paper to gather participants’ perspectives. This participant engagement will ensure that the APR is inclusive of the voices of both providers and participants.

In particular, the APR will review the pricing arrangement and price limits:

• a) that apply to supports delivered by disability support worker (DSW) by updating the ND/IS Cost Model for Disability Support Workers;
• b) for therapy supports to ensure participants receive value for money, while providers strive to improve quality of service and increase efficiency, with a particular emphasis on pricing benchmarks;
• c) for support coordination to promote service quality and value for money, with a focus on participants experiences when utilising support coordinators to oversee their supports;
• d) in relation to the NDIS Cancellation policy, which changed from two days to seven days in line with the Social, Community, Home Care and Disability Services (SCHADS) Award. The analysis will examine the impact on participants choice and control.

Consultation overview

The 2023-24 APR consultation, commencing on 25th January 2024 and concluding on 10 March 2024 for providers and 17 March 2024 for participants. This year’s consultation featured the publication of two key documents: a Provider Consultation Paper and a Participant Consultation Paper. These papers invited a wide range of stakeholders, including providers, participants, community members, and government entities, to contribute their perspectives and expertise. The robust response, especially from participants via the Form.io survey, underscores the community’s active participation and the effectiveness of using varied submission formats to accommodate diverse needs. A total of 912 submissions were recorded, a significant increase from the previous APR’s 304 submissions.

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Submissions were categorised as follows:

• Providers: Contributed 353 submissions, offering insights and feedback from a service delivery perspective.
• Participants: Contributed 559 submissions, broken down as:
  • 546 submissions received through the Form.io platform
  • 11 submissions were made through traditional paper forms.
  • 2 submissions were presented in an easy read format.

A summary of submissions to the Consultation Paper can be found in Appendix A and throughout the report.

Consultations with other government insurance and funding schemes

The NDIA collaborated with 16 Commonwealth and State Schemes to obtain their therapy pricing. Responses from 13 schemes were received. Schemes that assisted with information were:

• Catastrophic Injuries Support (CIS) Scheme,
• ComCare,
• Department of Veterans’ Affairs (DVA),
• Home and Community Care Program for Younger People (HACC-PYP),
• Lifetime Support Scheme (LSS),
• Motor Accidents Insurance Board (MAIB),
• Medicare Benefit Scheme (MBS),
• National Injury Insurance Scheme Queensland (NIISQ),
• Return To Work SA (RTWSA),
• State Insurance Regulatory Authority (SIRA),
• Victorian Transport Accident Commission (TAC),
• WorkSafe VIC, and
• WorkCover WA.

Pricing Arrangement Reference Group

The work of the APR was overseen by the NDIA’s Pricing Arrangement Reference Group, which provides advice, through the Chief Executive Officer of the NDIA, to

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the NDIA Board on price control arrangements for the NDIS. This is to ensure price regulation activities and decisions are coordinated to support the best possible outcomes for NDIS participants during the transition to a competitive marketplace.

The current members of the Pricing Arrangement Reference Group are:

• Flavio Menezes is a leading economist in market design, auction theory, competition, regulation, and incentives. He is a Professor of Economics and the Director of the Australian Centre of Business and Economics at the University of Queensland. He is also the Chair of the Queensland Competition Authority. As a highly regarded expert, he is sought after for his economic counsel by various private and public organisations.

• Matthew Clarke works as an Associate Director at Marsden Jacob specializing in price regulation, cost recovery and funding. He has a proven track record of conducting complex pricing reviews for state, territory, and federal government agencies across sectors.

• Felicity McNeil PSM has a track record of managing complex healthcare budgets including such as the Pharmaceutical Benefits Scheme (PBS) and other subsidy national programs, both within the Health and Finance portfolios., which she has since channelled into her volunteer work helping patient and clinical groups to participate in government processes.

• Deborah Cope brings over 35 years of experience in analysing, reforming, and implementing social, economic, and environmental policies across all levels of government. She was a member of the New South Wales (NSW) Independent Pricing and Regulatory Tribunal (IPART), and the Principal of PIRAC Economics.

• Jim Cox, PSM is Deputy Chair of the Australian Energy Regulator. He contributes advice from his experience in price regulation, economics, and social policy issues.

2.6 Pricing Interdepartmental Committee

The Pricing Interdepartmental Committee was established in November 2022 to discuss strategic matters related to pricing in the NDIS and its wider implications within the current economic environment. This forum allows the NDIA to proactively work with key Australian Public Service stakeholders with broader Government considerations to NDIS pricing-related matters.

The committee consists of representatives from Department of Social Services, Department of Finance, NDIS Quality and Safeguards Commission (NDIS Commission) and the Commonwealth Treasury.

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Domestic economic conditions and the care economy

Pricing regulation in the current economic environment

Australian economic conditions can impact the efficiency and sustainability of the market for disability goods and services and therefore influence whether the NDIS price control framework continues to be appropriate or if modification is required.

The NDIS is part of the care and support economy² and the broader Healthcare and Social Assistance (HCSA) sector³. Economic trends in these sectors could potentially affect the efficiency and sustainability of the disability market. The NDIS both impacts, and is impacted by, the care and support economy and the HCSA sector, particularly the care and support economy as the NDIS comprises a greater proportion of this sector relative to the HCSA sector. However, given the diversity of the care and support economy and the HCSA sector, it is important to exercise caution when drawing comparisons between trends in the HCSA sector and the specific trends within the NDIS workforce.

Data on economic conditions suggest strong demand for health and disability services, a tight labour market for health and disability related workers, as well as higher costs given high general inflation and wage inflation.

Businesses in the care and support economy are reporting strong confidence in the outlook for their industry. Despite the slowing in Australian economic growth, the HCSA sector is resilient due to the ‘non-discretionary’ nature of the services provided

² This comprises the paid provision of disability support services, early childhood education and care, veterans’ care, and aged care. Department of the Prime Minister and Cabinet. (2023). Draft National Strategy for the Care and Support Economy.https://www.pmc.gov.au/resources/draft-national-strategy-care-and-support-economy/summary

³ The Health Care and Social Assistance sector includes organisations mainly engaged in providing human health care and social assistance such as hospitals, General Practitioners and specialists, allied health, diagnostics, aged and other residential care, child care and disability care.

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(generally necessities) and continued demand from population growth and an ageing population. The HCSA is also heavily reliant on funding from the public sector and the NDIS is a major and fast-growing item of government expenditure.

High inflationary environment can increase cost pressures on providers delivering supports to NDIS participants such that these providers may then be under pressure to raise prices for their services. The HCSA sector had significant inflation and wage growth in the year to December 2023, above the all-industries’ growth rates, suggesting strong upward pressure on input costs and wages. One of the reasons for wage inflation in the sector has been increases in Award wages, such as a 15% increase in minimum wages for direct care employees working in aged care.

Jobs and Skills Australia considers many NDIS-related occupations to be in “shortage”. This includes aged and disabled carers, personal care and special care workers, physiotherapists, speech professionals and audiologists, occupational therapists, and psychologists. Some of these occupations have vacancy numbers that are high compared with their total occupational employment levels (i.e., speech professionals and audiologists, occupational therapists, and physiotherapists).

NDIS supports

Disability Support Workers (DSWs) are an essential part of the NDIS, bridging the gap between healthcare services and daily living assistance for individuals with disabilities. DSWs provide personalised support that enhances the independence of NDIS participants.

Therapy supports, including early childhood interventions, are also an essential part of the NDIS by playing an important role in assisting participants to achieve their personal goals. These supports are delivered by a diverse range of professionals, such as Occupational Therapists (OT), Speech Pathologists (SP), Physiotherapists, Psychologists, and many others.

Economic outlook

Economic growth, as measured by real Gross Domestic Product (GDP), has been slowing from above average rates, given lower household consumption from high

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inflation and increased interest rates*. The Commonwealth Treasury projects real GDP growth to be 1.75% for 2023-24 before rising in the following year®. See Figure 2 for historical and forecast GDP growth outlook.

Figure 2: Australian Real GDP Growth from 2000 to Forecasted 2024

| Per Cent | | — | — | | Actual | Forecast | | -1 | 2000 2003 2006 2009 2012 2015 2018 2021 2024 |

Source: ABS National Accounts, Commonwealth Treasury Financial years

Businesses in the care and support economy are reporting positive business confidence in the outlook for their industry®. According to the Roy Morgan Business Confidence survey in April 2024, general business confidence is still below the

• Commonwealth Treasury. (2024). Budget 2024-25: Budget Strategy and Outlook Budget Paper No.

1. https://budget.gov.au/content/bp1/download/bp1_2024-25.pdf

® ibid

® Roy Morgan. (2024). Roy Morgan Business Confidence improves marginally in April — up 1.3pts to 99.3 before next week’s pre-election Federal Budget. https://www.roymorgan.com/findings/roy- morgan-business-confidence-april-2024

ndis.gov.au 2023-24 Annual Pricing Review 21

Inflation

High inflation has had widespread impacts across the economy over the past three years. High inflationary environment can increase cost pressures on providers delivering supports to NDIS participants, such as energy, logistics, increased interest rates and property costs. These providers may then be under pressure to raise prices for their services.

Moreover, headline inflation, as measured by the Consumer Price Index (CPI) (changes in the price of a fixed basket of goods and services that are representative of items bought by households), was 3.6% in the year to March 2024, above the Reserve Bank of Australia (RBA) target of 2% to 3%. The RBA predicts inflation to fall to be within the target range by December 2025, given easing supply constraints and a slowing of domestic activity from high interest rates.

Inflation in the health industry (‘Health CPI’) has run above the economy wide (all-industries) rate for most of the past decade, suggesting relatively strong cost pressures on providers delivering supports to NDIS participants.

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pressures in the HCSA sector¹¹. Between December 2021 and June 2023, all industries CPI outpaced Health CPI given significant inflationary pressures across the economy, but Health CPI has returned to being higher than the all-industries CPI (see Figure 3)¹².

Figure 3: All Industries CPI and Health Specific CPI Growth from 2016 to 2023

Per Cent
Jun-2016	4%
Jun-2017	4%
Jun-2018	4%
Jun-2019	3%
Jun-2020	3%
Jun-2021	5%
Jun-2022	6%
Jun-2023	5%

¹¹Australian Bureau of Statistics. (2024). Consumer Price Index, Australia March Quarter 2024: 6401.0 Consumer Price Index, Australia, TABLES 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes and TABLE 7. CPI: Group, Sub-group and Expenditure Class, Weighted Average of Eight Capital Cities, Original. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release ¹²ibid

3.5 Labour market conditions

The labour market has been strong relative to historical averages. The seasonally adjusted unemployment rate in March 2024 was 3.8%, lower than the ten-year historical average of 5.3%¹³. About 336,900 additional people became employed over the year to March 2024 (seasonally adjusted, 2.4% year-on-year growth)¹⁴. The labour market is still forecast to remain strong relative to historical averages over the coming years as economic conditions relax. The unemployment rate is expected to rise to 4% in the June quarter 2024 and then is forecasted to peak at 4.5% in the June quarter 2025¹⁵.

The HCSA sector is the largest employing sector in the economy and employment in the sector is growing quickly. The sector had 2.23 million workers in February 2024, equating to 15.6% of total Australian employment¹⁶. The sector has grown at a higher average rate over the past ten years compared to all other sectors (see Figure 4)¹⁷. In the year to February 2024, the number of new entrants was 112,940 persons (about 5% of the total HCSA workforce)¹⁸.

¹³ Australian Bureau of Statistics. (2024). Labour Force, Australia March 2024: Unemployment rate, Australia, August 1966 to March 2024, seasonally adjusted. https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/mar-2024 ¹⁴ Australian Bureau of Statistics. (2024). Labour Force, Australia March 2024: 6202.0 Labour Force, Australia Table 1. Labour force status by Sex, Australia - Seasonally adjusted https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/mar-2024 ¹⁵ Commonwealth Treasury. (2024). Budget 2024-25: Budget Strategy and Outlook Budget Paper No. 1. https://budget.gov.au/content/bp1/download/bp1_2024-25.pdf ¹⁶ Australian Bureau of Statistics. (2024). Labour Force, Australia, Detailed February 2024, seasonally adjusted. https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia-detailed/latest-release#about-this-release ¹⁷ ibid ¹⁸ ibid

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Figure 4: Employment Growth in All Industries and HCSA Sector from 2015 to 2024

Per Cent
12
-8

Source: ABS Labour Force, Australia, Detailed

It is estimated that total DSW employment is currently about 300,000 persons. As published in the NDIS Review in December 2023, there were an estimated 280,000 DSWs as of 2021-22, representing about 14% of total HCSA employment.

There are about 170,000 therapists in Australia. The most recent data from the Australian Health Practitioners Registration Agency (AHPRA), shows an increase in registered therapists from 2018 to 2022, with Psychologists, Physiotherapists, Occupational Therapists, and Podiatrists collectively growing by 27% (see Figure 5). Specifically, Psychologists saw a 24.3% increase, and Physiotherapists increased by 25.9%, reflecting a growing workforce responding to heightened healthcare demands, including from NDIS participants.

1. Australian Government. (2023). Employment Projections. https://labourmarketinsights.gov.au/our-research/employment-projections/

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Figure 5: Number of Registered Therapists from 2018 to 2022

	2018	2019	2020	2021	2022
Occupational Therapists	25,000	27,000	30,000	34,000	39,000
Physiotherapists	30,000	36,000	41,000	45,000	48,000
Podiatrists	5,000	7,000	9,000	12,000	13,000
Psychologists	20,000	24,000	28,000	35,000	40,000

Source: Department of Health and Aged Care

Jobs and Skills Australia considers many NDIS-related occupations (relevant for the broader HCSA too) to be in shortage - aged and disabled carers, personal care and special care workers, physiotherapists, speech professionals and audiologists, occupational therapists, and psychologists²⁰, supported by record high numbers of vacant positions in NDIS-related occupations. There were 13,000 vacant positions in March 2024 for these NDIS-related occupations (see Figure 6)²¹. The occupations

^²⁰ Jobs and Skills Australia. (2024). Jobs and Skills Atlas. https://www.jobsandskills.gov.au/jobs-and-skills-atlas-dashboard?nav=state&region=aus&tab=state-occupations; an occupation is in shortage when employers are unable to fill or have considerable difficulty filling vacancies for an occupation or cannot meet significant specialised skill needs within that occupation, at current levels of remuneration and conditions of employment and in reasonably accessible locations.

^²¹ Nowcast of Employment by Region and Occupation. https://www.jobsandskills.gov.au/data/nero/nero-dashboard

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with the highest number of vacancies were aged and disabled carers, nursing support and personal care workers and occupational therapists?2. Figure 7 shows the comparison between job vacancies and total employees for each occupation in the NDIS-related occupations. The occupations with the highest proportion of vacancies relative to their total occupational employment levels are speech professionals and audiologists, occupational therapists, and physiotherapists.

Figure 6: Job Vacancies in NDIS-related Occupations from 2015 to 2023

[Image not converted to Markdown – check the source PDF page for the actual content]

Source: Jobs and Skills Australia

22 ibid

Special Care Workes Speech Professionals and Audiologists Occupational Therapists Welfare Support Workers Nursing Support and Personal Care Workers Physiotherapists Aged and Disabled Carers

ndis.gov.au 2023-24 Annual Pricing Review 27

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Figure 7: Job Vacancies compared to Total Occupational Employment at November 2023²³

Per Cent
Speech Professionals and Audiologists
Occupational Therapists
Physiotherapists
Nursing Support and Personal Care Workers
All Industries
Welfare Support Workers
Aged and Disabled Carers
Special Care Workers

Source: Jobs and Skills Australia; ABS Labour Force, Australia, Detailed

Data from Jobs and Skills Australia in December 2023 indicates that there may have been an improvement in matching community and personal service workers to vacancies, in line with a softening of tight labour market conditions. Over the quarter, fill rates (percentage of advertised vacancies filled by occupation) for vacant positions, applicants per vacancy, qualified applicants per vacancy²⁴, and suitable

²³Note psychologists have not been included as the employment data available also includes psychotherapists.

²⁴Qualified applicants are the applicants who are assessed by employers as meeting the required qualification criteria of an advertised vacancy.

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applicants per vacancy improved®, particularly in regional areas®. This trend is the same for all occupations?’.

Continued net immigration could alleviate some of the current labour supply pressures in the care and support economy workforce, as could growth in the education and training for these occupations. Overseas-born workers comprise a large and growing proportion of the care and support workforce in Australia (40%)?°. Migration levels have recovered strongly since 2020-21 (COVID-19 related border closures), although levels are forecast to reduce significantly due to migration reforms?9. Those studying health-related subjects (all students studying at higher education institutions) increased by 4.2% per annum on average between 2012 and 2022°9.

The disability workforce is expected to increase significantly to support the forecast growth in the NDIS and the HCSA sector. The Australian Government projects

25 Suitable applicants are those who are deemed by employers to be suitable for the job advertised.

26 Jobs and Skills Australia. (2024). Skills Shortage Quarterly Report - December 2023. hits://www.jobsandskills.gov.au/publications/skills-shortage-quarterly-december-2023

27 ibid

28 Jobs and Skills Australia. (2021). Care Workforce Labour Market Study Report Summary. https://www.jobsandskills.gov.au/sites/default/files/2023-1 1/care_workforce_labour_market_study_- _report_summary.pdf

29 Australian Bureau of Statistics. (2023). National, state and territory population June 2023. hits://www.abs.gov.au/statistics/people/population/national-state-and-territory-population/latest- release; Commonwealth Treasury. (2024). Budget 2024-25: Budget Strategy and Outlook Budget Paper No. 1. hits://budget.gov.au/content/bp 1/download/bp1_2024-25.pdf; Commonwealth Treasury. (2023). Mid-Year Economic and Fiscal Outlook 2023-24. hits://budget.gov.au/content/myefo/download/myefo2023per centE2per cent80per cent9324.pdf; Crowe, D. (2023, December 11). Australia’s migrant intake blew out to 510,000. Students are central to the plan to halve that. Sydney Morning Herald. hits://www.smh.com.au/politics/federal/australia-s- migrant-intake-blew-out-to-5 1 0-000-students-are-central-to-the-plan-to-halve-that-20231210- p5eqcg.html

3° Department of Education. (2024) Student Data. hits:/Mwww.education.gov.au/higher-education- statistics/student-data

ndis.gov.au 2023-24 Annual Pricing Review 29

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employment in the HCSA sector to grow by 257,300 people (or 12.1%) over the five years to May 2028, the fastest growth of all 19 Australian and New Zealand Standard Industrial Classification (ANZSIC) industries³¹ and more than double the next closest sector in the economy (Professional, scientific, and technical services) (Figure 8). Employment growth for aged and disabled carers is expected to be 42,600 people between May 2023 and May 2028, equating to a total growth rate of 14.3%³². Employment projections show a 17.2% growth for therapy professionals by 2028 (see Table 1).

Figure 8: Projected Employment Growth for Five Largest Sectors from May 2023 to May 2028

’000s Workers	Health Care and Social Assistance	Professional, Scientific and Technical Services	Education and Training	Manufacturing	Accommodation and Food Services
257	117	82	73	59

³¹ Australian Government. (2023). Employment Projections. https://labourmarketinsights.gov.au/our-research/employment-projections/

³² Australian Government. (2023b). Employment Projections. https://www.jobsandskills.gov.au/data/employment-projections

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Table 1: Employment Numbers and Projected Employment Growth for Therapy Sector

Occupation Code	Occupation	Employment Level — May 2023 (’000)	Projected employment level – May 2028 (’000)	Projected employment growth – five years to May 2028	Projected employment growth – five years to May 2028 (%)
2527	Audiologists and Speech Pathologists/Therapists	15,100	17,600	2,500	16.6%
2522	Complementary Health Therapists	8,400	9,800	1,400	17.0%
2721	Counsellors	29,700	34,200	4,500	15.1%
2511	Nutrition Professionals	8,200	9,500	1,200	15.1%
2524	Occupational Therapists	26,000	30,400	4,400	16.9%
2525	Physiotherapists	37,300	43,900	6,500	17.5%
2526	Podiatrists	5,900	7,000	1,000	17.6%
2723	Psychologists	41,800	48,600	6,800	16.3%

Source: Job and Skills Australia*?

Wage growth

Australian Government. (2023). Employment Projections. https://labourmarketinsights.gov.au/our-research/employment-projections/

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The rate of wage growth in the economy has been increasing since June 2020. Wage growth (as measured by the all-industries’ Wage Price Index excluding bonuses) rose to 4.1% in the year to March 2024³⁴. The Commonwealth Treasury projects wage growth to be 4% in 2023-24 before decreasing in the following two years³⁵.

The HCSA sector had significant wage growth of 5.3% in the year to March 2024, above the all-industries’ growth rate, suggesting strong upward pressure on wages for care and support sector workers (see Figure 9)³⁶.

One of the reasons for wage inflation in the sector has been increases in Award wages, such as a 15% increase in minimum wages for direct care employees working in aged care³⁷ (Social, Community, Home Care and Disability Services (SCHADS) Industry Award, Aged Care Award, and Nurses Award) from 1 July 2023, an increase in the national minimum award wages of 5.75% from 1 July 2023, and an increase in the minimum wage from 1 July 2023³⁸.

The transferability of skills and qualifications across the care and support economy and the HCSA sector means that NDIS providers need to compete for workers with aged care, health care and childcare services. This competition is influenced by various factors such as relative wages.

• Australian Bureau of Statistics. (2024). Wage Price Index, Australia March 2024, All Industries Excluding Bonuses Original. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/mar-2024

• Commonwealth Treasury. (2024). Budget 2024-25: Budget Strategy and Outlook Budget Paper No. 1. https://budget.gov.au/content/bp1/download/bp1_2024-25.pdf

• Australian Bureau of Statistics. (2024). Wage Price Index, Australia March 2024, Excluding Bonuses Original. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release#industry-wage-growth

³⁷ Also the most senior food services employees.

³⁸ Fair Work Commission. (2023). 15% wage increase for aged care sector.

Disability support worker wage

The Award wage system is one of the determinants of wages for disability support workers (DSWs), and thus the cost of many related NDIS supports. Many DSWs delivering NDIS supports are paid under Schedule B of the SCHADS Award.

Minimum weekly payments for DSWs continue to be above the comparable industries in the care and support economy when considering a similar type of worker (Figure 10). Note, it is considered reasonable to match a DSW with the Aged Care Award Level 4 worker. The NDIA does acknowledge some supports delivered to NDIS participants could be delivered by other types of workers classified across other types of aged care employees, such as level 3 or level 5. This matching is based on the type of work generally performed by this type of worker (personal care tasks by a “personal care worker grade 3”) and personal care support provided require working under limited supervision. Further the Aged Care Award level 4 worker can require a qualification at Certificate 3 or higher, while the SCHADS Award Level 2 worker requires a Certificate 4 or higher.

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Figure 10: Weekly Minimum Wage for SCHADS Award, Aged Care Award, Children Services Award for Comparable Workers

Source: Fair Work Ombudsman

Table 2 displays a comparison of wage data from major job platforms as of February 2024, demonstrating that DSWs earn, on average, higher hourly wages compared to aged care and children services workers.

Table 2: Relative Advertised Wages of Disability, Aged Care and Children Services Workers as at February 2024 (Australian Average Wages, dollars per hour)

Occupation	Employed	Seek	Indeed	PayScale
Disability support worker	280,000 (2021-22)	$35 - $40	$36.79	$29.37
Aged care worker	195,000 (2020)	$20 - $30	$33.69	$24.83
Children services worker	216,000 (2021)	$25 - $30	$31.29	$24.47

Source: NDIS Review, Department of Education, Committee for Economic Development of Australia (CEDA). Estimates exclude nurses and allied health professionals. Wages from Seek, Indeed and PayScale

3.8 Aged Care Award wage changes

On 15 March 2024, the Fair Work Commission (FWC) made the decision for further adjust wages for direct care and indirect care employees in the aged care sector of between 18.2% to 28.5%, inclusive of the interim 15% increase already awarded

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from 1 July 2023°°. It is still too early to determine the impacts of this decision on wage increases for aged care workers, which brings aged care workers roughly on par with disability workers, but this warrants ongoing monitoring. The NDIA’s DSW Cost Model uses the SCHADS Award, social and community services employee, Level 2, pay point 3 as the basis of setting the standard disability support worker. The 2022-23 Annual Pricing Review considered this to be appropriately matched with the Aged Care Award Level 4 worker.

In the proposed amendments to the Aged Care Award classifications and definitions found in Schedule | (page 68) of the draft determination and award mark-up, the current “Aged care employee — direct care — level 4” will translate into the proposed classification of “Aged care employee — direct care — level 3 - Qualified”.4°

This matching is based on the type of work generally performed by this type of worker, personal care tasks and personal care support requiring working under limited supervision. Further, the proposed Aged Care Award “Aged care employee — direct care — level 3 — Qualified” requires a Certificate III in Individual Support (Ageing) or equivalent, while the SCHADS Award Level 2 worker requires a certificate 4 or higher.

The NDIA does acknowledge some supports delivered to NDIS participants could be delivered by other types of workers classified across other Schedules or Awards. For instance, the proposed new classifications for aged care employee — direct care - level 2 or level 4.

Comparison of these Award worker minimum wages show the wage difference between comparable workers continue to narrow between the disability and aged care sector. From 1 July 2023, the weekly pay rate for the full and part time

---

Footnotes:

[°°] Fair Work Commission. (2024). Summary of Decision 15 March 2024: Work value case — Aged care industry — Stage 3. https://www.fwc.gov.au/documents/decision-summaries/2024fwcfb150-summary.pdf

[4°] Draft determination and award mark-up - Aged Care Award 2010 (fwe.qgov.au)

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SCHADS Award Level 2, pay point 3 was $1,300.60 ($34.23 per hour).⁴¹ The equivalent to the full and part time Aged Care Award “Aged care employee — direct care — level 4” from 1 July 2023 was $1,144.20 ($30.11 per hour).⁴²

The proposed increase to the full and part time Aged Care Award “Aged care employee — direct care — level 3 — Qualified” is expected to raise the minimum wage for this worker to $1223.90 ($32.21 per hour), a proposed pay increase of 23% from prior to these Aged Care reform, inclusive of the previous 15% interim increase.⁴³ This would equate to a difference of $76.7 (approximately $2.02 per hour), with the SCHADS Level 2.3 worker wage rate to being 6.3% higher.

Overall, the NDIA acknowledges that adjustments to Aged Care worker wages and other reforms being undertaken in aged care. However, given the pay of disability support workers still considered being competitive, on balance the NDIA expects the impact of these changes to the cost of similarly skilled workers to be limited in the short run. Moreover, these changes may impact workforce availability across the broader care sector, so the NDIA should continue to monitor these reforms as suggested in 2022-23 APR.

⁴¹ Social, Community, Homecare And Disability Services Industry Award 2010 pay guide effective 1 July 2023 found at Pay guides - Fair Work Ombudsman.
⁴² Aged Care Award 2010 pay guide effective 1 July 2023 found at Pay guides - Fair Work Ombudsman.
⁴³ Draft determination and award mark-up - Aged Care Award 2010 (fwe.gov.au)

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Disability Support Worker related supports

Disability Support Workers (DSWs) are an essential part of Australia’s care and support workforce, bridging the gap between healthcare services and daily living assistance for individuals with disabilities. DSWs represent the sectors diversity, working across various settings, from private homes to community-based programs, providing personalised support that enhances the independence of NDIS participants.

DSW Cost Model

The NDIA uses the Disability Support Worker Cost Model (DSW Cost Model) to estimate the cost that a reasonably efficient provider would incur in delivering a billable hour of support. Its primary aim is to ensure that pricing reflects the cost-of-service delivery.

Parameters of the DSW Cost Model

In 2022, the NDIA simplified the DSW Cost Model. The simplification was prompted by a recognition that the model’s specificity could inadvertently encourage rigid adherence to its parameters as de facto targets, potentially restricting innovation, and adaptability of providers. By consolidating the cost categories into direct worker employment costs, operational overheads, and corporate overheads, the NDIA aimed to reflect the nuanced ways providers manage their resources. The current parameters of the cost model are outlined below:

• Base salary and shift loadings: The cost model is based on permanent worker costs. These are linked to Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award) wage levels 2.3, 2.4/3.1, 3.2 and 4.4.

• Direct on-costs: Includes Superannuation entitlements (currently 11%, 11.5% from 1 July 2024), Annual Leave entitlements (20 days), Personal Leave entitlements including domestic and family violence leave (10.3 days), Long Service Leave entitlements (4.3 days), and Employee Allowances.

• Operational overheads: Covers supervision, quality and safeguarding, training, and workforce rostering costs, alongside provisions for utilisation rates and the mix of permanent versus casual staff and the extent to which overtime is utilised.

• Corporate overheads: Accounts for essential business functions such as accounting, human resources, information technology, legal, and marketing.

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• Margin: Which represents the return that the provider makes because of the provision of working capital to the business.
• Temporary loading: Acknowledges additional costs arising from COVID and SCHADS Award adjustments, introduced on 1 July 2022.

The DSW Cost Model is driven by the relevant SCHADS Award wage movements, operates on a multiplicative basis where operational and corporate overheads, as well as profit margins, are determined as a percentage of the direct costs, including wages and on-costs. Any changes in the wage rates directly affects the entire model’s cost structures. Moreover, temporary adjustments, applied as a percentage of all costs at the end of calculations, recognise additional variables like COVID-19 impacts and SCHADS Award updates.

In setting NDIS price limits for DSW related supports, the model is an important approximation, considered alongside market dynamics, award conditions, and regulatory requirements such as minimum wages and superannuation contributions.

Applicable industrial award

The national award for DSWs is the SCHADS Award. The NDIA recognises that some DSWs are classified as Home Care Employees and others are classified as Social and Community Services Employees under the SCHADS Award, and some DSWs are employed under Enterprise Bargaining Agreements (EBAs). However, these EBAs must leave the worker no worse off than they would be under the applicable industry Award. The NDIA therefore considers the conditions set out in the SCHADS Award to be the appropriate foundation of the DSW Cost Model.

The NDIA recognises that providers can employ DSWs with different skill levels and levels of experience to meet the different needs of participants. The Cost Model therefore has different sets of cost assumptions for four types of workers (DSW Level 1, DSW Level 2, DSW Level 3 and DSW Level 4). This does not mean these are the only types of workers who can deliver NDIS supports through DSW-related supports.

DSW price limit growth

Standard DSW-related supports in the Cost Model use the SCHADS Award, at Schedule B, level 2.3. Level 2.3 has seen, on average, an annual increase of 6.1% since 2013, outpacing the Wage Price Index (WPI) by over 2% (see Figure 11). These rises, mandated by the Fair Work Commission (FWC) through the Award system, account for approximately 80% of the increase in NDIS DSW price limits.

The Equal Remuneration Order (ERO), issued by the FWC in 2012, has significantly influenced the SCHADS Award growth. The ERO addressed gender-based pay disparities in community service roles, mandating special pay rises in addition to the regular annual increases through the Award System until 2020. As a result, the SCHADS Award’s minimum pay rate for level 2.3 is now 23% higher than it would be.

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