SDA: What are they thinking?

The Context.  In March this year at a senate estimates hearing the deputy CEO of the NDIA stated the following in response to a question about price reviews ““Recognising there's a shortage and we want to encourage investment, it would be very short-sighted to change a policy where we still didn't have the supply” It’s a recognition that there is a shortage and that messing with the policy wouldn’t help the situation.

Fast forward - the long awaited SDA Provider and Investor Brief was released on 24 April by the NDIA. You can read it here.

Strong Start. The document starts out by nailing the identification of some of the real issues impacting upon SDA delivery – price regulation, participant planning processes and linking participants to supply of SDA.

Some Numbers. With respect to how many people may receive SDA funding the document states: “The NDIA considers 6% to be the best current estimate of the number of participants who will be found eligible for SDA funding under the NDIS. However as an estimate, this may change over time as participants enter the Scheme and have their NDIS plans made.” – This is also good – the first time the NDIA has acknowledged there may be more than 28,000 participants eligible for SDA (or maybe it alludes to less?) which aligns with some recent information released by Summer Foundation.

Planning Longevity. And my favourite part – the document poses the question: Is SDA funding here to stay? The answer is Yes. “SDA funding under the NDIS is a legislated commitment of Australia’s Commonwealth, State and Territory governments, set out in the NDIS SDA Rules (2016) under the NDIS Act (2013). This legislation provides the foundation for government’s long-term and firm commitment to SDA funding under the NDIS.” This is further explained that SDA must reduce person-to-person supports as part of the overall benefits – a hint into the housing plan content perhaps?

But Wait! It started strong, identification of the problems, some encouraging statements around the key themes impacting supply at present. But then the document takes a dramatic turn into some new and very alarming territory.

Price Limits? Firstly, there is this section about SDA Prices and the introduction of the term “Price Limits”. Wait a minute, what? Price Limits? The tables of SDA Prices within the SDA Price Guide refer to Base Prices that are then multiplied by location factors, sprinkler requirements and maybe even AT and innovation allowances – nowhere within the Price Guide is there a reference to Price Limits in the context of this new document.

It then goes on to say “Price limits provide a ceiling up to which providers can negotiate with participants for the provision of SDA”. Again, WHAT? Negotiations? Ceiling? Where are these new concepts coming from?

It gets worse. Much, much worse. On choice and control – the document states “It is important for providers to note that an SDA budget to support a single resident dwelling is only likely to be provided to a very small number of SDA eligible participants (a small percentage of NDIS participants overall), even when the dwelling is in a configuration that makes shared supports possible.” It outlines that most people will be assessed to live with 1 to 4 others with shared supports.

Singles need not apply.  As a father of a young adult with extreme functional impairment this statement is really disturbing. My son wants to live alone in a shared support environment. This is his choice on how he wants to live and until today we had hope that this may be a reality thanks to the NDIS. There are now dark clouds gathering over this goal.

And finally, if the above was not enough to seriously strangle the already gasping SDA supply, the following statement towards the end of the document should do the trick to nearly turn supply off:

Builders Beware.  “SDA providers can also take steps to protect against the risk of vacancies. First and foremost, providers should wait for NDIS participants’ SDA eligibility and plan decisions before making offers or investment decisions. Providers can look to ‘future proof’ their investment decisions by designing and developing SDA that could serve multiple uses. This could allow flexibility for providers to offer dwellings to alternate markets (e.g. aged care or the general housing market). Finally, providers and developers of new SDA dwellings should do their own market research into the supply and demand for the SDA design category within the areas they plan to build a new SDA dwelling. The NDIA will support this research by providing reliable information about demand as it becomes available.”

From Bad to Worse. There is no information on who has SDA in their plans, where are they and against what criteria they were assessed.  Now with this document, there are so many new contradictions, new terminology, new risks, new uncertainties that have been introduced. This seems to be in direct conflict with what this ‘briefing’ was supposed to offer.

DSC is not alone in its disappointment about this document. We have been receiving calls for the last 24 hours from serious investors and here are some direct quotes::

"We are in big big trouble. We have made in good faith decisions based on the rules, position paper and available information and now the goalposts have changed. "

"I thought that the NDIA wanted SDA? This document does exactly the opposite""I'd have more certainty putting my investment funds on a round of two up at the RSL than putting it into SDA"

"This is precisely why investors have been so nervous about SDA - the risk of the goal posts changing - well they just removed them from the field"

"Who is in charge of this mess?"

"Dont bother reviewing the PDS - we are out!"

DSC will release further analysis of this recent release over the coming weeks to give some guidance to the sector about the next steps with SDA.