NDIA Announces Housing Pricing Framework & RFI

The National Disability Insurance Agency (NDIA) has this week released the overarching pricing framework for how it will calculate and pay for housing build through the NDIS.

The NDIA is also calling for innovative housing ideas in the Barwon trial site – although no funding will be allocated to ideas at this stage.

 

Housing Pricing and Payment Framework

All governments have now endorsed as ‘Specialist Disability Accommodation Pricing and Payments Framework’. This Framework will guide the NDIA’s approach to spending its $700m per annum budget for building and maintaining housing for NDIS participants with high support needs.

The Framework outlines a set of criteria and concepts that the NDIA will use to determine an efficient price for housing. The Framework establishes the concept of ‘Benchmark Prices’ for housing that will be set by the NDIA, as well as how the NDIA will determine which participants will have housing funding in their individual plans.

The Framework contains the outcome of detailed agreements between the Federal and State Governments that authorizes the NDIA to spend its housing budget. It does not include the actual ‘Benchmark Prices’ for housing – these will be set by the NDIA in 2016 after consultation with the community.

 

Benchmark Prices

The NDIA will set standardized prices for housing in the NDIS known as ‘Benchmark Prices’. The Price will be set for a period of 5 years to give providers certainty of the value of the housing contribution from the NDIS.

The prices will be published by the NDIA for consultation before the prices are finalized. This will include consultations with providers, residents and Commonwealth and State governments. Benchmark Prices will be included in a participant’s package. The NDIA can pay the amount directly from the participant’s plan to the provider. The Benchmark Prices will be annual values, but the NDIA can determine the scheduling of payment throughout the year.

 

Calculating the Benchmark Prices

The Framework includes a basic formula for calculating the cost of the dwelling.

Dwelling price =

   Consumption costs (replacement for the dwelling at the end of its useful life)

+ Opportunity costs of capital (a single national weighted cost of capital will be used)

+ Costs of ownership (facilities management; rates; insurance; tenancy management)

– Land price inflation (long-run, multi year rate set by the NDIA)

– Resident rent contributions (25% of Disability Support Pension + Commonwealth Rent Assistance)

The NDIA will use this basic formula to create a range of separate Benchmark Prices that account for different costs due to: dwelling location; number of bedrooms; furnished/unfurnished; building design requirements; and any other factors the NDIA believes relevant.

 

Provider neutrality and government land

The Framework treats all providers and all land the same – it deliberately aims to create a level playing field for all providers.

The NDIA is not expecting for differences in provider characteristics – benchmark prices will be set and apply to all providers. This is consistent with the NDIA’s approach to pricing all other services in the scheme – there are not different rates for providers who are more/less efficient.

Two important outcomes for provider neutrality:

  1. Disability housing on government land will not be favored under the Framework. The NDIS’ approach to housing goes to great lengths to avoid any preference for housing on government land. All NDIS participants living in disability accommodation will receive the Benchmark housing price and pay this amount to the property owner. The Framework envisions that State Governments can charge full market rent to the housing provider using government land and providers can keep the NDIS housing payment.
  2. Payments will be the same regardless of how the asset was acquired. The NDIA’s Benchmark Prices will be the same regardless of whether the provider purchased the asset or the asset with gifted or sold for a below market rate. Providers will receive equal value of payments for dwellings that are purchased from the private market and for those that were fully paid for using Commonwealth/State grants.

 

Participant choice

The Framework does not provide a definitive answer on how much choice participants will have in practice, and what this choice will means for housing providers.

The Framework have two strong themes:

  • Participant choice – “participants will have the ability to move between accommodation providers and their funding will also move”
  • Provider certainty – “the NDIS funding should be sufficient to cover the efficient cost of providing accommodation over its full lifecycle…and therefore should allow providers to attain finance (debt and equity) in the private market to meet these lifecycle costs”

The Framework implies that NDIS housing funds can only be used in dwellings that the NDIA has approved and registered as eligible for this payment. This is not an area described in detail in the Framework. As such, it is unclear how the NDIA will create a system that achieves both these objectives simultaneously. This will be a key area for providers during the consultation process.

 

Deciding which participants will receive housing funding

The NDIA has consistently said that the housing funding is limited and was designed to support only 28,000 participants. The funding is focused on participants with unique housing needs that arise because of their disability.

The Framework sets out more detail on the two groups of participants that will be provided housing funds through the NDIS.

Housing payments will be included in plans for all participants living in specialist state government disability accommodation and participating living in aged care. These participants will not have have demonstrate the below needs as their current placement demonstrates that they have met the criteria.

The NDIA will develop and publish more detailed criteria for how it will assess whether a participant receives housing funds, based on the above categories.

 

Next steps for providers

The Framework represents a significant step forward in housing. Housing providers can now better understand the overall pricing strategy the NDIA will use for housing payments. Providers can use this information to better understand how the payments for housing will be structured and begin developing funding models that use this financing approach.

The Framework does not outline the types of dwellings or models of housing+support that the NDIS will prefer, nor does the Framework outline how the NDIA will select the dwellings eligible for the payment. This detail is yet to come.

Providers can also review DSC’s previous article on the ‘20 Things Your Organisation Needs to Know About Housing in the NDIS’.

 

Request for Ideas in Barwon

In addition to releasing the Framework for pricing, the NDIA is also seeking ideas of housing models that could assist participants in the Barwon trial site.

The ‘Request for Information’ published by the NDIA is not being used to allocate any funding for housing proposals. The request is for ideas of housing models that the NDIA can consider as it decides what types of housing it should be funding for participants.

Responses to the Request for Information are due to the NDIA by 1 February 2016.

The NDIA has left the scope of ideas open very wide, allowing housing providers and the broader community to come up with new and innovative approaches to meeting the housing needs of people with disability.

The only requirement set out in the Request for Information is that the housing is for people with disability who have specialist housing needs through:

  1. Participants who require a specialist built-form
  2. Participants support needs can only be met cost effectively by specialist disability accommodation

The Request for Information also reiterates the principles for housing that have been promoted by the NDIA in different forms over the last 24 months. Housing ideas should:

  1. promote independence and social and economic participation;
  2. be consistent with insurance principles;
  3. demonstrate value for money;
  4. be affordable and scalable housing model;
  5. sustain informal caring arrangements;
  6. meet the preferences of people with disability; and
  7. address quality and safeguard requirements.

Responses to the NDIA’s call for housing ideas can be found on the AusTender website and is due by 1 February 2016. https://www.tenders.gov.au/?event=public.atm.show&ATMUUID=5F5B8416-BB47-F593-1B3097D6FB421789