Business Confidence Survey of the Disability Services Sector

Results from 2015

National Disability Services

Centre for Applied Disability Research

Contact details

Ken Baker

NDS Chief Executive

02 6283 3200

Gordon Duff

General Manager, Sector Development and Research

02 9256 3117

About National Disability Services

National Disability Services is the peak industry body for non-government disability services. Its purpose is to promote and advance services for people with disability. Its Australia-wide membership includes over 1050 non-government organisations, which support people with all forms of disability. Its members collectively provide the full range of disability services—from accommodation support, respite and therapy to community access and employment. NDS provides information and networking opportunities to its members and policy advice to State, Territory and Commonwealth governments.

About CADR

The Centre for Applied Disability Research exists to improve the wellbeing of people living with disability by gathering insights, building understanding and sharing knowledge. The Centre for Applied Disability Research is an initiative of NDS.

About this report

The NDS Business Confidence Survey of the Disability Services Sector monitors the business sentiment of leaders in disability service organisations.

A survey which focuses specifically on the disability services sector is warranted given the market transition thatwill occur when the National Disability Insurance Scheme (NDIS) escalates from 30,000 to 460,000 participants beginning in roll out sitesin 2016.

The 2015 report highlights challenges and opportunities for providers and public policy makers, and, for the first time, reports on emerging trends following three waves of data collection over a two year period.


In September 2015, a third wave of the NDS Business Confidence Survey was conducted. A response rate of 40% (n=424) was achieved. This is consistent with response rates for waves one and two in 2014 (seeTable 1).

Table 1: Response rates for each Business Confidence Survey

When / Number of responses / Response rate
Wave three / Sept 2015 / 424 / 40%
Wave two / Nov 2014 / 399 / 39%
Wave one / May 2014 / 420 / 42%

To maintain the integrity of the research, the survey was managed by independent research consultants, BMG Research. Invitations to participate in the survey were emailed to NDS member organisationsand completed by CEOs, senior management or board members.Respondents were asked to assess their organisation’s performance in the past six months (prior to the survey being conducted) and to indicate their performance expectations for the next six month period.

A number of organisations (n=121)have responded to all three waves of the survey, providing us with an opportunity to track theirprogress over time.

Table of contents

Contact details

About this report


Section 1: Confidence at a glance

Signals that business conditions are improving

The confident and the less confident

Section 2: Challenges and opportunities for providers

Increasing demand for services is prompting growth and competition

Productivity is threatened by insufficient business resources

Maintaining and building income remains critical

Organisations have diverse strategies to tackle the changing market

Organisations feel hindered by uncertainty and are sceptical of government support

Section 3: Challenges and opportunities for public policy makers

Demand, income and competition are increasing in trial sites

Very small organisations are at significant risk


Section 1: Confidence at a glance

As organisations continue to prepare for a new business environment, business confidence in the disability sector holds steady from 2014. Consistent with previous waves, 64% of organisations expect to meet their objectives over the next six months.

A number of improved business conditions emerged in2015. Interestingly, however, these did not translate into organisations having higher expectations of meeting their objectives in relation to supporting people with disability to live more fulfilled lives.

Signals that business conditions are improving

Evidence of improved business conditions includeprogressively more organisationsreporting increased income (46%, up from 36%) and 69% of organisations reporting having sufficient financial resources (up from 60%). Although declining, almost one in three organisations (31%) still had less than sufficient financial resources.

Figure 1: Percentage of organisations with increased income or sufficient finances over past six months, all waves

Wave 3 / Wave 2 / Wave 1
Increased income overall / 46% / 40% / 36%
Sufficient or more than sufficient financial resources / 69% / 64% / 60%

Organisations continue to grow, with most (70%) planning to increase the scale and/or range of their services over the next six months. As a consequence, 55% of organisations expect to hire more staff (up from 50%), with 51% having already increased their casual staff (up from 36%) and 39% having increased their permanent direct support staff (up from 33%). Fewer organisations are reportingdifficulty recruiting for these positions. Further, 63% of organisations report satisfying all the demand for their disability services (up from 51%).

The confident and the less confident

As with all waves, confident and less confident organisations did not show any difference in either their annual turnover or the states or territories in which they operate. However, an emerging trend is that the vast majority of confident organisations tend tooperate mostly or wholly as disability service providers. By comparison, organisations with only one aspect of their operations in disability were typically less confident about the future (70%compared with 80% for disability focused service providers). This is logical given that planning for the impact of disability reforms on provider operations consumes a good deal of strategic and management capacity. Organisations working with a range of beneficiaries across multiple sectors need tomonitor several policy environments, establish coherent strategic directions for each target market, and juggle competing priorities.

Section 2: Challenges and opportunities for providers

Increasing demand for services is prompting growth and competition

Consistent with 2014 results, two thirds of organisations report that demand for disability services has increasedand that their ability to meet this demand is improving (63% met all demand compared with 51% in Wave one). Although the NDIS will attract new competition, most organisations do not believe their competitors are meeting unmet demand for their service. In the emerging market, 63% of organisations report increased competition (down from 70% in Wave two), and 80% anticipate increased competition in the future (down from 88% in Wave two).

A steady proportion of organisations are growing their businessin response to increased demand with more than half (59%, consistent across all waves) having increased either the scale or range of their services or client mix.

“Provided we grow in areas, we are confident we will be able to meet demand.”

In order to sustain growth,many organisations (71%) report increasing their number of staff. For instance, 51% of organisations increased their number of casual staff (substantially up from 36% in Wave one) and 39% increased the number of permanent support staff (up from 33% in Wave two). These were also the two employment types where the fewest organisations reported difficulty recruiting (40% and 46% respectively). Growing use of casual staff by organisations is of concern since overreliance on this strategy to deal with uncertainty in the business cycle can lead to a reduction in service quality. This is commonlyas a result of job insecurity, low investment in skills and training andlack of consistent support.

“Unmet demand is primarily due to lack of human resources which means we must get more sophisticated in our workforce planning activities.”

The most difficult to fill job type was permanent allied health staff (69%) consistent with known allied health workforce shortages in Australia, although this was also by far the job type least recruited for (26%).

More than half (53%) of organisations reported difficulty with retention of at least one job or employment type, most commonly with casual staff (32%) and permanent allied health staff (30%). The higher turnover of casual staff could suggeststaff are seeking more secure employment while allied health turnover may be due to competing demand from other employment sectors.

Productivity is threatened by insufficient business resources

The increased demand for disability support, with the associated organisational growth, is not being matched by increases in key organisational resources. Around half of organisations reported that they had insufficient internal capacity to improve services or innovate (52%, consistent with all waves) and Information and Communication Technology (50%,up from 44% in Wave two but in line with Wave one results).Furthermore, 44% of organisations had insufficient information, advocacy and support to develop their business, 37% lacked enough space to operate, and 36% reported insufficient business management information.

“The costs of operating [in] trials and the application of an efficient pricing model has impacted on increased capital, back office and systems development costs at a time when we are also experiencing reduced incomes as we transition customers into the trial site.”

Reported shortfalls in key organisational resources sound a note of caution about the extent to which business growth is sustainable,and related efforts to achieve gains in efficiency, productivity and service improvement.

Maintaining and building income remains critical

The mix of income sources has remained stable over the waves (seeFigure 2). Most organisations have income from state government (92%), returns from investments (79%), fee for service income (79%) and philanthropy and grants (77%). Less common sources were membership fees (64%), income from federal government (58%) and business sponsorship (49%). Income from the NDIS had reached 39% of organisations,which is the same as commercial revenues (39%).

“As a disability organisation we have to start being innovative and seeking grants and other sources of income through funding for programs not related to disability services.”

“[We are] seeking to diversify different disability funding as well as generate non-government income from fee for service activity.”

Almost half (46%) of organisations had increased their overall income – although 17% reported a decline. Two-fifths (39%) of organisations reported increased income from state government and one-third (35%) of organisations had increased income from fee-for-service income. With regards to income from philanthropy and donations, 21% reported an increase while 24% reported a decline over the previous six months.

Although income is growing for some organisations, so do expenses, with three-quarters of organisations expecting expenses to grow over the next six months. The majority (68%) of organisations reported an increase in expenses on a ‘per client’ basis.

Figure 2: Profile of income sources, all waves

Wave 3 / Wave 2 / Wave 1
Income from state government / 92% / 91% / 87%
Returns from investments / 79% / 82% / 81%
Fee for service income (from clients) / 79% / 79% / 76%
Philanthropy and grants / 77% / 74% / 75%
Membership fees / 64% / 69% / 66%
Income from federal government (excludes NDIS income) / 58% / 56% / N/A
Business sponsorship / 49% / 49% / 46%
Income from the NDIS / 39% / 34% / N/A
Commercial revenues / 39% / 38% / 45%

Organisations have diverse strategies to tackle the changing market

Consistent across all waves, most organisations are looking to improve their productivity (93%) and were planning to increase their level of investment to achieve growth (75%). Only 9% of organisations were specifically not focused on growth,for reasons that included concerns about NDIS pricing.

“Growth in the current market could speed up the financial demise of the organisation as rates paid are too low.”

“Outcomes for clients is a priority for us, this may or may not mean growth for our services.”

Around one in five organisations (18%) were looking to use debt to finance growth, on par with results from Waves one and two (21% and 16% respectively). Some organisations expressed concern about taking on debt finance in untested business conditions.

“Using debt to finance growth is a sound strategy under pre-NDIS conditions. However, the turmoil and uncertainty in our operating environment and the lack of information on the policy direction, or the nature of the market NDIS is trying to create, makes it almost impossible to make a sound business decision on using debt to finance growth. In fact, under current conditions, a decision to finance growth with debt is more akin to taking a punt rather than a reasoned business strategy.”

A very small number of organisations (n=4) said they are preparing to exit the disability sector, in line with previous results.

“[We will] limit exposure to unviable disability services, engage in areas which appear to be sustainable, and diversify outside of disability.”

Other organisations are looking to collaboration as a strategy for being flexible and responsivein a changing and increasingly competitive funding environment. Over the past six months, one in five organisations (23%) had entered into a joint working relationship, in line with previous results.These relationships include partnerships (13% of all organisations), followed by consortiums (7%) and mergers (6%).Of the organisationsthat had not already entered into ajoint working arrangement, 12% expect to enter a merger within the next six months – slightlyhigher than in 2014 (8%).

Larger organisations ($10 million or more annual turnover) were the most open to collaborations, with 33% already participating in partnerships, mergers or consortiums (compared with 19% for very small organisations). Of the large organisationsthat were not already engaged in some form of joint working, 27% expect to enter a merger within the next six months.

“We are looking at a merger with a larger organisation as it is the only way we will exist come the end of government funding. We don't want to lose our local identity and brand, so need to ensure the interests of our members and clients are protected.Without the funds to undertake due diligence we will need to borrow money.”

Organisations feel hindered by uncertainty and are sceptical of government support

The consistent majority of organisations are confident that the policy directions are heading in the right direction (66%), but that the policy environment still remains uncertain (77%).

“Policy uncertainty is costing money. [We] need to have a clear detailed plan on how the NDIS will roll out and operate consistently across the country. It is time to take the learning and make a decision.”

“I have found that the NDIA is unable to answer many questions posed by providers. It seems that decisions are being made on the run and the scheme is not well planned.”

Although on the decline, concerns about the amount of red tape remain, with half of all organisations agreeing there were too many rules and regulations (down from 68% in Wave one). Meanwhile, 57% of providers agreed that the government should enforce higher service standards across the disability sector (up from 45% in Wave two and 52% in Wave one). This suggests that quality and safety are top of mind,particularly as a new regulatory framework for the NDIS is developed. Nonetheless, organisations were keen to differentiate higher service standards from more red tape.

“Higher service standards enforcement does not mean demand for more documentation and ticking boxes - it means meaningful engagement.”

Providers expressed concern that the Government was not working collaboratively with the sector. Only 16% of organisations thought that the Government was anticipating or responding to their needs (in line with previous waves). Although co-design has been fundamental in the development of the NDIS, less than one-third (28%) of organisations agreed that the NDIA was working well with providers to implement the NDIS (35% of NDIS registered providers).

“My organisation is a strong advocate for the NDIS, however the lack of consultation and disrespect of service providers and their experience of disability has astounded the sector.”

Similarly, around one-third (31%) of organisations believed that the risks that the NDIS presented to their organisation outweighed the opportunities.

“We are still currently assessing whether we will or will not continue to play an active part in the disability sector via the NDIS. Given that important elements of the system are still being built (e.g. e-market; integration of ICT), signals from the NDIA [indicate] the market will not be deregulated for [some] time, and that the rollout timetable has yet to be finalised and published, one may understand that we are being cautious. On the face of it, it would appear that the risk vs return equation is unevenly and negatively balanced, although we are open to being convinced otherwise.”

Organisations remain divided on the timing of the NDIS rollout, with 42% believing that it should be slowed down, and 45% saying it should proceed as planned. The speed of transition to full scheme is set to increase dramatically in July 2016 following the signing of bilateral agreements in a number of Australian jurisdictions.

Section 3: Challenges and opportunities for public policy makers

Demand, income and competition are increasing in trial sites

Business confidence for NDIS registered providers was moderately lower than for non-registered organisations (59% compared with 66%). In contrast to Wave two, providers were more confident than non-registeredorganisations (65% compared with 60%), butconfidence remains consistent with Wave one (59% compared with 64% for non-registered organisations). These swings in business confidence for NDIS registered providers may suggest a more volatile business environment wherecompetition effects and regulatory uncertainty make demand– andincome – moreunpredictable.

NDIS registered providers were more likely to report increased demand over the past six months (73% compared with 62%), a trend apparent over all three waves. However, NDIS registeredproviders were less confident they could satisfy demand for their services (56% compared with 65%), which highlights the increased demand being generated by the NDIS.Nevertheless, NDIS registered providers are growing their services, with 80% having plans to increase their scale and/or range of services over the following six months (compared with 63% for non-registered organisations). Further, in line with business growth, NDIS registeredproviders were more likely to have increased the number of staff across all role types, particularly allied health staff and permanent direct support staff.

Income among NDIS registeredproviders was more likely to have increased (53% compared with 42% for non-registered organisations). However, consistent across all three waves, there is very little difference between the proportion of NDIS registered versus non-registered organisations reporting having sufficient financial resources (69% and 68% respectively).This may reflect transition costs associated with managing change and growth in the NDIS environment, including need for more investment in infrastructure or new business functions such as marketing.