Opinion: Doors open for disability housing with the new NDIS Housing Funding Principles

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Ashurst partner Michael Ryland and lawyer Alice Greenwood weigh in on the NDIS Bilateral Agreement.

In September last year, the NSW and Commonwealth Governments entered into the Bilateral Agreement Between The Commonwealth and New South Wales For The Transition To A National Disability Insurance Scheme (Bilateral Agreement).  A schedule to this agreement sets out the funding principles that will guide the NDIS's $700 million housing capital budget.  The Bilateral Agreement specifically contemplates that the NDIS will fund reasonable and necessary supports for individuals with disability who require assistance in regard to housing.  Funding will be directed to the following categories of supports:
  1. supports to assist people with disability to live independently in the community, including building capacity to maintain tenancies;
  2. home modifications for accessibility for people living in private dwellings, legacy public and community housing dwellings; and
  3. user costs of capital in some situations where a person requires an integrated housing and support model.
It has therefore become apparent that the NDIS will not be responsible for the creation, ownership or management of housing stock for NDIS participants, despite the anticipated increase in demand for more suitable accommodation as the Scheme's roll out continues.  Instead, NDIS participants will largely access housing through public or community housing or private rental markets, all of which have to date been in short supply or inadequate condition. 

This gap between community need and NDIS functions provides an opportunity for key players in the disability, social finance and housing sectors to innovate and develop scalable models to fund, build, maintain and operate specialist disability accommodation.

The Bilateral Agreement confirms that the NDIS will not be responsible for the provision of affordable accommodation for people with disability however, it does clarify the NDIS's commitment to fund some specialist disability accommodation, in order to meet the needs of (according to the Productivity Commission, approximately) 16,000 individuals with profound disability who require financial assistance with accommodation.
Essentially, there are six principles underpinning the NDIS's willingness to fund specialist disability housing.  They are:
  1. A mix of potential funding streams may be utilised to address existing and new specialist disability housing;
  2. NDIS funding will be based on the efficient lifecycle cost of delivery of specialist disability housing representative of typical providers;
  3. Residents will be expected to provide a reasonable contribution towards their accommodation;
  4. Funding is provided for both existing and new supply of specialist disability housing, as well as for both private and publicly owned specialist disability housing;
  5. Providers of specialist disability housing will be expected to finance the purchase or build of accommodation and their operations; and
  6. Funding will allow for the continuity of supply from providers and also ensure there is scope for change and innovation over time.
In terms of costing the Scheme, the Productivity Commission included an average amount to support housing arrangements for participants with high support needs (around 6% of participants).  This is referred to as the "user cost of capital funding stream".  It is currently estimated by the NDIA (in a 2014 discussion paper on Optimising the User Cost of Capital) that between 3 and 4 per cent of overall package costs have been earmarked to assist with the user cost of capital for housing.  By adopting this kind of funding stream, the NDIA will not directly own or develop housing stock, but plans to increase housing supply by encouraging growth which is driven by the housing sector, disability service providers, governments, families, social finance and philanthropy. 

As such, the principles set out in the Bilateral Agreement reflect the NDIA's strong preference to collaborate with stakeholders in the sector to address disability housing needs and specifically, develop additional housing stock suitable for NDIS participants. 

At a high level, the NDIA has identified a few avenues which could be explored jointly by interested stakeholders to increase housing stock.  These include working with State Governments which have primary responsibility for affordable and public housing, promoting stock ownership transfers from governments and disability service providers to community housing associations, forging partnerships with developers, community housing associations, banks, philanthropists and social finance providers and promoting the benefits of both mixed equity and singleton models of ownership.

Suitable and stable housing is critical to the wellbeing and independence of people with disability.  For organisations and individuals involved or interested in developing innovative solutions to address the shortage of disability housing, the policy direction of the NDIA as captured by the Bilateral Agreement, is encouraging.

By Michael Ryland and Alice Greenwood
 

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