This is the third report of the National Performance Benchmarking Project.1 It provides a summary of changes in the financial performance of a Panel of disability service providers between 2014/15 and 2016/172 as they transition into the National Disability Insurance Scheme (NDIS). Reported data: The Panel of providers that have participated in this study has varied, with some losses (due to merger, lack of resources, etc) and some gains. For the 2017 year, the total number of registered Panel members for the financial survey was 154 of which 124 provided data for the 2016/17 financial year. To provide the most accurate data on sector transition and to leverage one of the strengths in maintaining a panel, we have taken a conservative approach and included in this report findings related to the 99 organisations that provided reliable data for all three years of the study. The data from the other organisations will be included in later years. All participating organisations received an individualised benchmark report. The National Disability Insurance Agency (NDIA) report that $2.16bn was paid to providers and participants in 2016/17. Therefore, the Panel comprises organisations that received 7.8% of NDIA expenditure.3 As such, it provides a good snapshot of the performance of Australia’s disability sector as a whole. Key findings: Financial performance The rate of growth of providers is falling well short of that needed to meet demand. The Total Income for the 99 organisations in the Panel was $1.87bn. Of this, $1.54bn, or 82%, was income from the provision of disability services, an increase of 8.8% since 2016 and a total increase of 17.8% over two years. While this shows the sector has grown significantly, this rate of growth is insufficient to meet the forecast growth rate of the NDIA. In November 2016, the NDIA projected that the sector would grow from 17,000 participants in 2014-15 to 458,000 by 2019/20 with funding to increase from $8bn to $22bn or 175% in the three years.4 Although thousands of new providers have entered the sector each year, only half are active and 44% are sole traders. The NDIA reports that 80% to 90% of payments are received by 25% of providers5 . The survey data found that nearly half (48%) of the Panel report they were unable to meet demand for services (up from 35% in 2016) and 90% believe that they will be unable to meet demand in the next year. As such, it appears that organisations are not growing fast enough to meet demand for services. Expenses for the provision of disability services increased to $1.49bn, of which 71.7% was Employee Expenses. As expenses grew faster than income, the Panel aggregate profit ratio fell from 4.4% to 3.5%. In total, 74% made a profit, 6% broke even and 20% made a loss. Importantly, when analysed by source of income, the results show that organisations receiving more than 20% of their income from the NDIS achieved significantly lower profit compared with organisations that had little or no NDIS funding and were still receiving funding from State/Territory governments or other Commonwealth Government sources. In total, these organisations made an aggregate profit of 1.6% compared with organisations receiving less than 20% of funding from the NDIS which achieved an aggregate profit of 4.1%
