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Joint Standing Committee on the National Disability Insurance Scheme
04/07/2018
Market readiness for provision of services under the National Disability Insurance Scheme

BLACKWOOD, Mr Alan, Director, Policy and Innovation, Young People in Nursing Homes National Alliance

BO'SHER, Mr Luke, Chief Executive Officer, Summer Foundation

CONNELLAN, Mr Joseph, Director, MC Two Pty Ltd

FARRELL, Mrs Deborah, Senior Advisor Transition Project, Young People in Nursing Homes National Alliance

GRANT, Adjunct Associate Professor Elizabeth, Indigenous Design Place, The University of Queensland

MCLENNAN, Mr Dan, Chief Executive Officer, Summer Housing Ltd

RUTHERFORD, Mr Tony, Principal, Moores

RYAN, Mr Anthony, Chief Executive Officer, Youngcare

CHAIR: Welcome, and thank you all for appearing before the committee today. I'll invite any of you who wish to make some opening comments in a moment but, before doing that, we need to finish this session at 3 pm because of other commitments of members of the committee. We'll try and keep our questions succinct, and if you keep your answers equally succinct we'll get through more material that way, if that can be done. Do you have any comments to make on the capacity in which you appear?

Mr Rutherford : I'm a partner with the law firm Moores, which is a law firm based in Melbourne, where we advise a range of organisations in relation to disability services. SDA is one of those.

Mr Connellan : MC Two is my consulting firm. I provide advice typically to providers on the eastern seaboard around disability services and housing

Dr Grant : I'm a professor with the school of architecture at the University of Canberra. My evidence will be on an AHURI project that we ran on Indigenous disability and housing over a five-year period.

Mr McLennan : Summer Housing is a not-for-profit SDA provider. Our mission is very much focused on commissioning housing for younger people in residential aged care, using SDA as a platform to do so, and also looking to grow the broader industry's capacity to address that issue.

Mr Ryan : Youngcare is a relative teenager, with 13 years as an NFP. We were established to start addressing the issue of young people with high care needs who were placed in nursing homes and aged-care and hospital beds. Our role is to advocate to seek alternative and much better pathways for their care needs and their residential needs. That's a fight we continue to fight.

Mr Bo'sher : Similar to Youngcare, Summer Foundation focuses on young people living in aged care and on working with housing providers across the country to build more specialist disability accommodation for young people at risk of going into aged care.

Ms Farrell : We've been working around the transition for NDIS

CHAIR: Thank you. Would any of you like to make some opening remarks?

Dr Grant : Do we get the opportunity to make a two-minute summary of our points in regard to this?

CHAIR: Yes. This is the opportunity if you want to make some opening comment.

Dr Grant : I'll be polite and allow somebody else to if they want to start.

Mr Bo'sher : I'm happy to kick off. The work we've doing at Summer Foundation has been really, as I said earlier, focused on building the capacity and readiness of the market to build more housing for people with disability. We've been doing a lot of work around demand and supply for accommodation, mapping out across the country where more disability housing is needed. We've been running a platform that's connecting people who need housing with housing providers in the NDIS to provide that market interface, and we've also been working with banks and financial institutions to help them think about how they could invest in specialist disability accommodation. Our key message today probably is that, given the focus of this inquiry is about market readiness, we're seeing a lot of housing being built, but the problems we're seeing are not so much on the supply side of the market for accommodation, because we've seen really great inroads over the last 12 months with specialist disability accommodation being built. We do a demand and supply study in the market, and we found over 400 places of disability accommodation are currently committed and under construction across the country, which is a pretty good start for a new scheme that's very capital intensive, building housing.

We've seen the supply work quite well, so far. The problem that we're experiencing is that the market isn't working when there's not enough demand in the market with approved specialist disability accommodation in their plans. The situation as we see it at the moment is more that supply is almost outstripping approved demand for specialist disability accommodation. We know that there are a lot of people who need housing, but only a very small number of them are getting specialist disability accommodation funding approved in their plan. Only 23 of the 2,000 young people in aged care in the scheme have specialist disability accommodation in their plan. Even though those 2,000 people need housing and are a priority group for specialist disability accommodation, so few of them have funding approved that the supply that's in the pipeline is greater than the number of people who have funding for that.

We think that's a really important area of focus and framing for this inquiry. The supply side will work. We've seen investors, institutional capital and superannuation funds come to the table and want to invest in this. They just need confidence that the NDIA is going to be approving people for this kind of funding. There are a few things we think could be done to fix this. There's some work around the framework and the rules for specialist disability accommodation and providing a bit more funding certainty. Rather than five-year price reviews, we think prices should be set for a 10-year period. We think there's some work to do about prices that don't quite work in expensive metro markets like Sydney and Melbourne.

The participant experience and the participant pathway are probably the biggest areas of focus that we think will increase supply. People need confidence that participants are going to get approved for specialist disability accommodation. At the moment there are really long waits. We're seeing people waiting over six months to get that approved. That's important, but probably for the focus of this committee we think we haven't seen enough investment in market transition. This is a really different way of working—a year-to-year subsidy for housing—and providers need a lot more support to transition to that model. We've been doing some of that around demand and supply and our matching platform, but we think there could be more investment from government in bringing that market together, given it's a really new way of funding housing in the NDIS. We'd be happy to go into any of that in more detail.

CHAIR: Thank you. Mr Blackwood?

Mr Blackwood : In terms of defining the young people in nursing homes issue, we'd say that there's actually a lot more going on in terms of resolving that issue than just housing. Housing is clearly an issue. People want to move because the settings are often inappropriate, but there are other issues around the services that people are able to access and the choices they can make while they're in nursing homes. People are often admitted to nursing homes without choice. They're in hospital or face circumstances where a nursing home is a last resort, but it's a long-term last resort.

We don't want the sector or the committee to think that the solution to the young people in nursing homes issue is simply finding places to live. People in nursing homes often have very complex support needs. They live with health issues. They're people with brain injuries that require rehabilitation. There are workforce issues and capacity issues within aged care because aged care was never designed for young people.

The number of young people in nursing homes has been fairly consistent. Between 2006 and 2011 we had the Younger People with Disability in Residential Aged Care initiative, which put $244 million into addressing the issue. Some years later we're still sitting around 6,500. So it was good for the people it assisted, but it made no systemic change. There were some lessons out of the YPIRAC Program that I don't think have yet landed with the NDIS in both the design and the implementation. The main one being that they thought that the solution to the young people in nursing homes issue was just more disability services, so it didn't address health and some of the structural issues around aged-care assessments, rehabilitation and housing.

A lot of the talk about young people in nursing homes is simply about housing. Sure that's important, but at the same time when we're looking at more housing for people the NDIS has taken a position that it's not funding the additional personal support that people need in nursing homes. The way it's being funded is that they're reimbursing the Department of Health for the aged-care funding instrument amount in nursing homes but no more. So, although they're required under their act to fund reasonable and necessary services, which you'd think is the total quantum of someone's need, they're relying on the aged-care system and the obligations of aged-care providers under the aged-care standards to provide everything that the residents need. So we're seeing a lot of people in nursing homes continue to be underfunded significantly.

Also in terms of the reform with NDIS there have been no efforts to improve connections with the health system, so young people in nursing homes have got unmet health needs and unmet personal support needs. In terms of them being able to move out, even if they want to, there's no investment in transition for them. So they're actually deteriorating health wise, support wise and mental health wise while they're in nursing homes. So there are some significant funding issues and interface issues between aged care and the NDIS.

In fact, because the NDIS are reimbursing the Department of Health for the cost of the Aged Care Funding Instrument, NDIS is the only funder of young people in nursing homes, and yet they're not fully funding their needs. Someone in a nursing home is structurally disadvantaged in getting their needs met compared to someone who's living in the community or in a group home, where the NDIS take a different view. They're almost using a third party, being the aged-care system, to determine what is reasonable and necessary, using measurements and systems that are designed for older people and not fit for purpose at all. So we think there are a lot of issues other than housing.

The other thing to say in relation to SDA, support and the issue of how we resolve this issue is that we'd like to see housing and support addressed more closely together in terms of service design. If the intent of the NDIS is to reduce fragmentation and inequity, trying to actually stimulate a market that builds things without knowing who's going in and leaves support design as an afterthought is actually not going to work. We actually need to find ways to make coordination of all the various inputs part of the system, rather than segment and further fragment the way that services are designed for people.

Dr Grant : I've got a few brief comments for the other participants. With colleagues we conducted a six-year study doing the first mapping of lived experience of housing of Indigenous Australians in three locations: a remote location, a rural location and an urban location. We mapped those people and their outcomes for five years—now it's six years—and there were pretty drastic sorts of things. Just unpacking that, the first one is, as the community would be aware, Indigenous disability is hugely underreported. I don't think that we need to go into that in great detail. There are also enormous amounts of people living with chronic disease.

These are impacting on the housing outcomes. In fact, the definition under the NDIS is really affecting Indigenous Australians' capacity to actually access any services. One of the main parts of that is psychosocial disability, especially in terms of housing. What we're finding is that drug psychosis, cognitive function, learning disabilities, grief and loss issues, depression, anxiety and fetal alcohol syndrome are meaning that people cannot access appropriate housing. When we did this study we found that the backup housing that most of those people were using was in the criminal justice system, and in fact that was one form of housing. In fact, in a number of states we were looking at we could have said, 'If that's the thing for people living with psychosocial disability, that's one form of housing.'

There were a lot of barriers to housing that people were getting, and some of the people that we spoke with—and it was quite a large cohort over a number of years, and 20 per cent of them are now dead—would experience homelessness. There was no housing available, overcrowding, lack of affordable housing, long waiting lists where there was public housing, poor and extremely dilapidated housing, or no accessibility. We came up with a number of things that were really important in the design of any housing for Indigenous people living with it with a disability, and that was basically looking at design attributes which were based on country kinship practices and family. In particular we were very concerned about the sort of factors that were needed for people living with a physical disability. Almost everybody wanted to stay close to family and close to country.

For that reason we recommended in that study that there be a national change in the Building Code of Australia—what is now called the National Construction Code—for all housing across Australia, whether it be rental or whatever, for accessibility. I know that there's been quite a strong move to that and a very large resistance to that, but we saw it as the only way out. At least have it for Indigenous housing. People couldn't access their own home. We found a lot of people were locked in their own homes and hadn't been out for two or three years. They couldn't visit other people's homes either, because of chronic illness or their own physical disability.

The next one was for Indigenous people living with a psychosocial disability, which is really poorly defined under the NDIS. Some of the things that we were looking at were daylight; understandable home hardware, switches and things like that; soundproofing for children with learning disabilities; natural elements in the environment; safe retreat areas for children who had autism; internal and external connections and thickened boards; and controllable heating and cooling. I think the secretariat has got these notes anyway. If these children—especially the young people with a psychosocial disability—are integrated into the community in the first instance, we don't want to lose them to being moved out of the community. There was an absolutely desperate need for respite care for parents. In fact, a lot of family violence was related to that.

As all of the other royal commissions have found, there was a desperate need for safe, secure non-institutional housing when living with the family is not possible, and it needed to be near family and kin. At the moment, there is really only one best practice Indigenous housing facility for people with a psychosocial disability, and that's just been built. That's with Synapse in North Queensland. What we've found is that people want to live in a mixed housing group if they can't live with family. If it's on country it's better, but it does need 24-hour service delivery and it needs to be a homelike environment.

The other thing we found is that town planning was important. When that was based in the wrong location, in fact, there were some quite dire results for people living with psychiatric or psychosocial disability. For example, they were being attacked by other community members. For people who can't live in community—where they're unable to return to their own community for reasons often related to offences that are being committed on the community as a result of their disability—there need to be Indigenous-only specific units in urban and regional areas.

CHAIR: Thank you, Professor Grant.

Mr Connellan : I'm just giving you a copy of a modest book that I produced last week. This is essentially an expression of my pragmatic optimism, I suppose. I work around all of NDIS in housing rather than just the six per cent that relates to the SDA. One of the things that I've found as a long-term practitioner is that we were lacking a framework in which to engage. The language is different. The players are different. So I really tried to capture in this book a sense of what it is that's going on. I just make the point that in fact the conversation around NDIS and housing is not just around SDA but that the NDIS has an interest, although it doesn't have a funding responsibility, in housing all of the NDIS recipients well, both from a commercial and financial point of view and in terms of an outcome. One of the things I'm seeing is that, as this system evolves, we've got to recognise that it's going to take a number of years. While I understand the limitations of the agency, I've been trying to work with providers and communities to get them to understand what is possible within the landscape of housing for people with disabilities. That requires us to adopt a new approach.

One of the things that I found striking about the scheme is that under the NDIS there is an entitlement at an individual level, and that works. So we have a bunch of clever people chasing money that will deliver good housing over time. I am confident that will happen. But if we think outside of that fence—and it is very much a fence; either you're in SDA or you're not—you're interfacing with a whole other system such as social housing, which is highly rationed and controlled. So we actually need a way for communities to begin to engage and build their own responses for the maybe 60,000 or 70,000 NDIS recipients who won't get SDA but are ready to move to somewhere else. I hope creating frameworks like this will be the start of a lot of documentation and resources that will allow communities to have these very big conversations: 'How do we house our NDIS recipients in our community, including the ones that don't get SDA, which is the vast majority?'

CHAIR: Thank you.

Mr Ryan : I don't want to repeat too much of what has already been said, so I've been taking notes. I would go on to where we see our position. Our focus will be on the SDA component. The very principle of the NDIS, I think, hinges on independence, choice and dignity. When the people who we represent on a daily basis heard those three words—independence, choice and dignity—they embraced them. They believed that it was an opportunity for them to get out of the absolute chaos that the majority of them were living in at the time, and they really were looking at the development of the NDIS and SDA stock as a way of bringing them home—and I utilise that word 'home' strongly.

Youngcare embraces the lofty goals of the NDIS, but what we'd like to talk about today and bring into the conversation is that we think that the language that exists at the moment, particularly around SDA stock and housing, is being used in a way that impacts on future investment confidence. We don't want to labour too much on the McKinsey report the was released on April 24, but that day we had a call from four very strong investment groups that a number of the people in this room had been working with over a long period of time. We got a phone call at 4.30 that afternoon from all four of them, saying, 'We are freezing our investment in SDA stock.'

In most cases, SDA—in particular for young people with high-care needs—is the catalyst, or one of the catalysts, to the success of the NDIS. To have those phone calls on a Thursday before the public holiday was frightening, frustrating, and, more importantly, we felt this deep sorrow because we felt that there was great momentum, as my colleague Luke just said, and that supply was going well. But it really dented the confidence. The SDA stock and the rollout over the next three or four years is going to rely on confidence and language—strong, confident language—to allow people to be able to understand what the risk is on the investment. With everyone that we've been speaking to—yes, we know there are a lot of sharks and opportunists out there—the majority of the investors here are invested in the absolute success of the NDIS as well as getting a return that allows them to come in and mitigate against the risks.

Along with the language and some of the factors that need to be addressed, we believe there are still issues with the location index, particularly in major capital cities and particularly around Sydney. I don't think you're going to get too much SDA stock in the city of Sydney, but no-one can live here anyway. Processing in a timely manner, I think, is a very important issue. Whether you're a person who is trying to get SDA approved as part of your package, or whether you're an investor waiting and looking to see whether there are SDAs being processed from one end, that's a very important thing that needs to be fixed to give confidence to both the disability sector and the investment and development sector. There seems to be a disconnect. The investment and development sectors are waiting to see SDAs processed in a timely manner, and individuals, as part of their package, can't get an SDA successfully approved unless they can prove where they are going to. That is a disconnect that needs to be fixed up.

We talked about the mixed and confused language and messaging. We're looking forward to the KPMG report coming out to provide that greater confidence. We are happy that there is greater certainty around indexation and the longevity of the scheme. Ultimately, Youngcare sits in a situation where, on a daily basis through our free Youngcare Connect program that Shane Jamieson runs, we will be taking thousands of phone calls per year from families in disarray. They seem to be lost in the process, and they are wanting this sorted so that they can move into something that represents their age, their values and their willingness to live in an appropriate way.

Mr McLennan : I echo a variety of the comments that have been made, particularly Anthony's. We are, fundamentally, a start-up or a spin-off of the Summer Foundation, and in the last 12 months we've been able to create a pipeline of 110 SDA dwellings. We've contracted 30 of those already. We're looking to contract the balance in the next 60 days. We've had one institutional investor come on board with an initial facility of $50 million, with appetite to grow it to 300. We have another that we've negotiated terms with that we're looking to close. We think we're a great example of how this actual framework can deliver really great outcomes. We can attract institutional investment to an asset class that is fundamentally unattractive.

Building this accommodation, particularly for people with high-care needs, costs anywhere between 10 to 30 per cent more than what it is actually worth. You're leasing it to somebody who can't afford to pay you market rent in the most part, let alone an economic rent. As a framework to rectify what is an obvious area where intervention is required, we're unashamedly positive about what it can achieve. We've also had the downside of the rollercoaster, which Anthony alluded to, in terms of some of the recent hurdles and uncertainty that was created by the McKinsey report, although we think we've been able to navigate a lot of that and maintain that confidence.

What I'd like to add to the key points we want to get across is that we think there's certainly a great opportunity for the framework to be improved to encourage a greater proportion of families to stay together. At the moment, the way the framework is set up it does divide families; it assumes that people with disabilities are living with other people with disabilities, not their partners or friends who may not have disabilities. The economics just simply push you into situations whereby it's not viable to have couples co-accommodate where they both don't have disabilities. We don't think that's a great outcome for the community. I don't think that's an intended outcome; it's just how it is at the moment.

We also think there is a greater need to support the tenants, the investors and all stakeholders and support providers in recognising that we're at the front end of the system; we're not at the point of maturity. We can't administer and run SDA as if we have 28,000 dwellings that are all ready. We need to actually have the system administered in a manner that recognises that there is a significant housing shortfall. In our view, there are a variety of mechanisms that could be used to support that. We see one of the key areas as being the need to support the pioneers. Because the investments are being made, it's a critical period now to maintain that momentum and grow it. The flipside of that is quite concerning because if the people who've gone in early suffer, there won't be a lot of people who'll want to come in and back up and go again behind them.

Mr Rutherford : I've got nothing else to add to that. I'd echo everything that's been said. I'm certainly acting for a lot of developers who have invested on the basis of the pricing guides that came out, so there are debt and equity investments that have been made on the assumption that those prices will be maintained. The briefing paper that came out in April obviously created a lot of uncertainty, and the consequence of that will be that some of those developments will encounter financial difficulty. I'd echo Dan's point about the extent to which that will impact the desire of investors to put forward funds to develop these projects in the future, especially at a time where it's not really clear and there's no good data around who will be eligible for SDA. Unless that can be expedited in some way, even in an informal way where there's a prequalification or something of that sort, and that data can be provided to players in the market or potential players in the market, it will be difficult to get any confidence from a debt and equity perspective and for others to move forward with these projects. So I agree: it's a very critical point at this juncture.

CHAIR: I'll lead off with a couple of things. As I understand it, the way in which the system works at the moment is that if you're a developer, even if you might have, say, six people who have indicated they want to move into a house, you've effectively got dead capital for six months because it's not until the house is completed that you can actually achieve the ability of people to get the plan that will cover going into the house. So the house is built, but then you're waiting for months before people will move in and so that effectively is a dampener on investment. Is that right?

Unidentified speaker: That is correct.

Mr Ryan : We can't do presales.

CHAIR: No. So what's the solution to that, because that seems to be something that should be able to be addressed? Prequalification or what, Mr Bo'sher?

Mr Bo'sher : We recently put in a submission to the KPMG review of the SDA framework. That was a joint submission on behalf of 20 organisations: banks, providers, advocates and people with disability. One of the things central to all 20 of those organisations that were part of that joint submission was that people with disability should be approved for SDA by the NDIA in advance of having a particular housing option on the table. People should be approved for SDA and then should be able to shop around with different providers and different vacancies to be able to find the one that's right for them. At the moment that's often not how it's working for people with disability; often they're being told by the NDIA that they have to wait until there's a particular vacancy for them and then the NDIA puts it in their plan.

Fundamentally, for us the question is: who should decide where people with disability live? Our view is it should be people with disability who decide where they live. We think they should be approved for SDA and then go and find the right vacancy for them. For some people that might be a five-bedroom group home; for others it might be a one-person villa. Ultimately, we don't think it should be a public servant somewhere deciding whether the person is going to live in a five-person group home or one-person villa. The NDIA should just say that they get the subsidy and the person should be able to go and choose the right place for them.

CHAIR: And as a consequence of that it will give more certainty to the developer.

Mr Ryan : Correct. Just on that, and looking at it from the developer-investor perspective, the report that came out on 24 April said for the first time, in a very vague sort of way, that very few people would be granted the permission to live independently. They actually used the words 'very few'. The way the calculator had been set up meant that, rightly or wrongly, many people interpreted that—and this is where I agree that some of the available data and the messaging are poor—as they were incentivising independent living. You look at the values—107,000 as an example for a two-bedroom, one resident—and think they're trying to encourage that type of stock to be built. So you had these people, who were being motivated by the right reasons to come into this space, trying to interpret the calculator—and in many cases these people had already built the stock or were so far down the line that they couldn't reverse the build and were petrified that they were sitting on a bad investment.

What we're sitting on here, nationally, is a situation where you've got others who are lining up, wanting to come in and help and assist, but they're petrified of coming in because they're saying, 'Is it going to be changed once again?' That is the issue that's taking place from an investor-developer perspective. Ultimately, those who we represent, the individuals who are sitting back—the hardest conversation I had was on the Thursday morning, after the Anzac Day public holiday. We've got two staff members who are high-care who work with us. One of them came in to see me, and I said, 'How are you going?' She said, 'We've just been punched in the guts again.' They were seeing that this was the time where their options were going to be open to them; they believed the language.

CHAIR: I want to move onto a separate issue, Mr Blackwood. If a young person who has a disability is in a nursing home and that young person wants to apply for NDIS, can you step me through what happens and what's the likely outcome?

Mr Blackwood : I'll get Mrs Farrell to answer that.

Mrs Farrell : A young person registers and goes through the process of access as anyone else does at the moment.

CHAIR: Seeks a plan, yes.

Mrs Farrell : Yes, he gets a plan. In that plan, it's broken into a couple of different sections. What the NDIS will fund for somebody within residential aged care is equipment that's specialised for them. They will fund support for community access and social engagement. They will fund behaviour support management, so improving relations, and some allied health as well. They're the basic things, but in relation to—

CHAIR: What won't they fund?

Mrs Farrell : They won't fund additional personal support. So if someone has come into a nursing home having been in rehab say for six or 12 months, and has continued to build their skills and capacity, they won't necessarily be supported in that way to be prompted and encouraged to shower themselves, to do what they can do for themselves. They won't necessarily be given the time to set them up to eat for themselves, to regularly attend to the toilet and those sorts of things. So we are seeing examples where people will go in from hospital to residential aged care and within three months have very declining skills. There are multiple examples where people who had some capacity to be somewhat independent are now either needing surgery for contractures of legs and feet or wearing continence pants. They aren't independent at all. Some people who have gone in and needed some assistance with walking and stand transferring are now being hoisted. The residential aged-care services don't have the capacity to respond to those individual needs of that younger person to retain what they've gone into residential aged care with. There is no capacity to build on their skills to make them more independent.

Prof. Grant : Could I add something to that? This is on the hospitalisation to home transitions. What we found with a number of the Indigenous people that we spoke to was that in fact they were in the hospital system—there was one woman who was in the hospital system for five months—because housing modifications were so long to be delivered. She wanted to stay within her own home. She was in public community housing and they were not responsive to her staying within her own home. They wanted to push her into a care package, into a care home. She was in effect a burden on the health system for five months, because the hospital wasn't able to release her. We did the calculations on this. It was an inordinate amount of money because she couldn't be released. She had decided, and this was meant to be her choice of where she lived.

CHAIR: I was going to come to that with Mrs Farrell. Let's take the hypothetical young person in the aged-care home you're describing. If there is some other facility that person could move to, assuming that for the purpose of the question, and he or she wishes to do so, what's the likely response from the agency? Will they facilitate that or basically say, 'Bad luck'?

Mrs Farrell : The SDA is not happening, from the perspective of—

CHAIR: I understand. The point I'm trying to get to is, is remaining in an aged-care home the default position by dint of the fact that there are no other opportunities, but let's assume for the moment there is another opportunity: will that person be facilitated in moving out of an aged-care home or some other facility?

Mrs Farrell : Not easily at all, because the support won't be given to them. It's very hard to get the level of support that that person requires. That said, I've recently moved two young people from residential aged care into affordable and accessible accommodation. Because I knew them I was able to bring those two people together. I had been watching property for a while and I knew about this particular property and was able to facilitate those two people into that home. One of those ladies had actually been applying for SDA housing in existing housing, for a room in one of those houses, and had put in 10 applications, and none of those had been granted for the very reason that that she fell outside the cohort that they were used to providing care for. So I think there's a real mixture. The other thing I want to add is that we're actually seeing a number of young people in residential aged care being relinquished from residential aged care at the present time. We can bring to you today six examples of this.

CHAIR: By 'relinquished' do you mean moved out?

Mrs Farrell : They have been sent from the residential aged care to hospital and have been told that they will not be going back to that residential aged-care service.

CHAIR: Sent to hospital for reasons to be hospitalised?

Mrs Farrell : Because of social reasons, not because they had a medical health issue. They were a behaviour concern.

Senator GALLACHER: Mr Bo'sher, you said there were 400 dwellings or facilities on the supply side. Are they geographically spread?

Mr Bo'sher : Yes, they are quite widely geographically spread across states. We're seeing relatively even distribution. It's a little bit slower in Tasmania and South Australia because of the age cohorts of the trial. Providers have been less engaged with adults and therefore the accommodation side has been a little bit slower. Certainly in your jurisdiction and in Tasmania there are fewer properties being built. There are certainly more being built in outer metro areas than in remote areas, because providers have to take a risk in building something and then trying to find someone with a payment who wants to move in. That's where pre-approval of people and people getting approved and then going and looking will make those providers in regional and remote areas much more confident, because they'll actually know who's approved for what in their regional area.

Senator GALLACHER: On the demand side, we've taken evidence from the inception of this committee from parents with children with disability that their main concern was what was going to happen when they were no longer able to continue their care. Are you seeing any of that cohort looking at this option?

Mr Bo'sher : Yes, definitely. We know from the NDIS that they expect to fund 28,000 people with this housing subsidy, which, as Joseph said, is a small number of older people with disability in the scheme. But for those with the subsidy, we really do think the market is starting to respond. We've seen 400 of those places being created already. Some of those people moving into those places are children living at home with aging parents, and a small number are young people in aged care who are moving into those properties.

One of the challenges that we were just talking about around young people moving out of aged care is certainly that if we've only got 23 of the 2,000 people in aged care with this subsidy in their plan, that's a real barrier for them leaving. It's a little bit the same with children living with aging parents. It's very hard for them to go and have a conversation with a developer when they're not even clear about whether they're going to get the subsidy or not. So that pre-approval is really critical.

Senator GALLACHER: On that issue, it might be helpful for the committee if on notice you were able to provide the detail of the research you've done about the 400 places and indicate where there's not 100 per cent take-up, so we could say to the department, 'The market is responding, but the failure is that you're not getting the people into the places.'

Mr Bo'sher : We would be happy to provide that out of session.

Mr Ryan : Can I clarify? The market is responding but has stalled, from our perspective.

Senator GALLACHER: This is the critical point that we need to elevate, if you like.

Mr Ryan : Because of the language. The other thing that I can share from a Youngcare perspective is that we'll have four SDA dwellings coming out of the ground in the next couple of months. The lengths that we've needed to go to, as an NFP, to encourage or re-encourage people to have a crack at this I think is untenable for an NFP. We're doing two three-bedroom two-resident; five two-bedroom two-resident, with two commercial sites on the bottom. Technically, it'll return an SDA of about $900,000 for those in a shared living experience. We're taking 12 months of that first rental risk, so if we can't fill it we'll owe the investor $900,000. In the second year we're taking 50 per cent rental risk, and then in the third year we're taking 25 per cent rental risk. We made the decision to do this because we believe it's part of our mission as an NFP to encourage others to go forward and go with confidence. But you can imagine how hard it was for the board to sign off on. It's a $900,000 debt, or potential debt, that an NFP is signing up for to encourage an investor to come into this space.

Senator GALLACHER: Given the financial expertise from the chair of the NDIS down, I'm sure they would understand those figures better than perhaps half of the committee. Thank you.

Senator CAROL BROWN: Essentially—I may have got this wrong—you're telling us that there was no issue around supply of accommodation, but the issue is the NDIA.

Mr Bo'sher : Having put out there the bit about there being no issue about supply, I can do a quick follow-up, and others, I'm sure, will have something to say. Certainly what I was saying, and I think what others are saying here, is that the fundamental policy settings are that there's $700 million available for SDA, but it's attached to individuals. The market is going to respond to that for almost all of the market. It's a question about how quickly the market responds. That is the question. Fundamentally we've got the right program design, and supply is coming on board. As people have said, there are large-scale investors who are willing to invest in this. The biggest risk is not about finding capital that wants to invest or finding developers who want to build, because they're all at the table. What's holding them back from moving from, say, $200 million of community investment to $2 billion is a concern on the demand side—a concern that NDIA won't approve people in a timely way.

Senator CAROL BROWN: What's your understanding of why people aren't being approved in a timely way?

Mr McLennan : I think the issue coming down to us is the application of 'reasonable and necessary' to decisions about accommodation. We at Summer Housing have 10 dwellings in Newcastle, or in Belmont just out of Newcastle. That project was developed by the Summer Foundation. It's part of our creation. We were lucky enough to inherit it. It predated SDA. It was leased to individuals based upon an assessment or a best guess of what we thought at the time the eligibility of those tenants was. So we understood that we were taking risk and that they might not necessarily fit the criteria. But in the decisions that have come back for those tenants, of eight tenants who put up their hand for SDA, four received SDA. None of those four who received it received funding at a level commensurate with the dwelling. They were occupying predominantly large one-bedroom apartments living on their own. They were funded to occupy either shared apartments, townhouses or houses.

So the issue with the demand side of SDA isn't about whether or not there are ageing parents who are terrified about what's going to happen to their children or whether or not there are numbers of people in residential aged care who want to be housed. The demand issue is: will they actually receive funding from NDIA at a level which is commensurate with the dwelling? Being commensurate with the dwelling is commensurate with the assumptions that the dwelling has been funded for.

For example, a high-physical-support one-bedroom apartment will have a base SDA price of $86,000 per annum. That's necessary because that dwelling will need to be significantly overcapitalised. If somebody is investing for a one-bedroom apartment with high physical support based off that parameter, the exercise that we have is that we have to find a tenant who not only is going to be assessed as high physical support but also is going to be assessed to occupy an apartment—not a townhouse, a house or a group home—and it needs to be assessed that it's reasonable and necessary that they occupy on their own. Currently the practice is for the NDIA to make a decision. Their stated documentation talks about them making a decision on what is the appropriate dwelling type. What is appropriate is determined by the agency, not by the individual's choice.

The other ailments are around decisions. A number of tenants in Belmont who were rejected for SDA were rejected on the basis that they couldn't demonstrate that they had checked that there wasn't private rental accommodation that they couldn't modify. There are not many landlords who are going to let you modify a home. They also hadn't shown that they'd appropriately checked public housing registers and other things. At a time when we have such a shortage of housing and we're trying to stimulate supply, requiring this initial phase for a supply check seems anachronistic and it sort of complicates matters.

Echoing Luke's comments, we think that, to make the planning more streamlined but also to empower individuals, the agency's choice should be whether somebody needs high physical support or improved liveability—making that functional assessment—and then the choice of whether they're occupying a house or an apartment or something else is made by the individual. Particularly at a time when we have such a significant shortage of accessible accommodation, 'reasonable' and 'necessary' are going to be largely dictated by what's available, not what's affordable.

CHAIR: I'll ask you about 'appropriate'. If we take a non-disabled person, what's appropriate will vary from individual to individual in terms of their choice—whether they live in an apartment, a townhouse, a home or whatever. I'm trying to understand the rational basis for this. Are there different needs or is it the cost of providing the need?

Mr McLennan : Different rates apply to different housing typologies. Our inference is that the decision is made based upon what's affordable, but obviously, in an inner urban location, the cost in terms of producing a townhouse is significantly larger than the cost of producing apartments. That's why apartments exist, as an example,. The things that we would like it to take into account include access to public transport, access to economic participation, opportunities that can—

Mr Ryan : Social life.

Mr McLennan : Yes, all those outlets.

Mr Ryan : We take into account, when we're looking at a place for young people, access to a pub, access to movies and access to social clubs and sporting venues. Going off track just quickly, but I think it's important: one of our residents, Brian, was in aged care for 11 years after receiving an acquired brain injury on his way back from Iraq as a member of the Navy. I find it heinous that, for a returned service person, we didn't have the infrastructure to put him in a place that represented his age, his value. For 11 years he was PEG fed and sponge bathed. Within two weeks of being in a care facility for the young—or any facility that's worth his while and helps him feel valued—he started speaking. They closed up the PEG and he started eating by mouth. We've got people living in absolutely horrendous conditions at the moment, and the NDIS was created to bring hope. This conversation is such an important one to have in order to see that the next way forward provides them with the independence, choice and dignity that they're after.

Senator CAROL BROWN: Do you have consultations with the NDIA or the department?

Mr Ryan : Yes, regularly.

Mr McLennan : I think this is something that this committee and the government can really assist with: clarifying the intent of SDA. Is SDA's intention to fund a piece of social infrastructure which is critically important and is otherwise uneconomical for the market to produce without support or is SDA's purpose to save the NDIS money on other supports?

The agency believes it is the latter and, in fairness to them, if that's not the case then they need to be told that. In working within a paradigm that it's a support to save them money on other supports, we will always have our backs to the wall trying to make cases on the question of what is appropriate.

Mr Blackwood : There's another element to eligibility for the SDA, which impacts on people who are already in group homes, which have largely been granted SDA status. In their planning meetings, if they express a desire to move out of their group home and explore their options, they get told by planners that they're not guaranteed to keep their SDA status when they go on their search for other housing. So it actually does provide a bit of a consideration for them. 'Am I allowed to move? Do I want to move? Can I move?' In fact, the SDA has been designed for a purpose, but really part of the intent of the NDIS was to enable people to leave those congregate settings and explore other options, and at the moment there isn't that opportunity presenting itself. There's more of a risk, and it requires a detailed OT assessment to see if they're eligible once they find somewhere. The process of getting out of a group home and into a more suitable chosen option is actually really unclear, and people are being warned off.

Mr Rutherford : There's no doubt that you need a streamlined process for conducting those assessments. I've already been retained by people just in relation to challenging their plans after conducting initial review and then going to the AAT. If we can't have people conducting those assessments where there's clarity around what requirements need to be met, I think there will be other resources that will be taken up at the AAT, and that's really an issue today.

Mr Blackwood : I think there's a bigger question around the design of the SDA and how the NDIS is facilitating people's move into more mainstream community options. Do you do it one person at a time? Do you attach money to individuals, do one dwelling at a time and try to fit someone in, or do you take a systemic approach: how do we get young people out of nursing homes through policy, systems and targeted funding? How do we develop a viable, affordable and accessible housing sector? These questions wont' be answered if we go person by person. The individualisation of the NDIS is something that's actually got a lot of merit, but I think there are some things where perhaps a more collective and social policy, civil society type of approach is needed rather than lumping everything down the individual track. So I think there is still some merit in the way the SDA is proceeding, but I don't think it's the only way. While it's there, it may be drowning out some other possibilities.

Dr Grant : The other point is to realise that your NDIS package is reliant on you having a house. You can be assessed and, if you're homeless, none of the services can be delivered. There's such a chronic shortage of appropriate housing. There is a great number of people who have had assessment packages. Quite often your advocacy is nil during that and, as soon as you're homeless, all of the services drop away.

Mr Blackwood : I think we have a great advantage in that we've got the Transport Accident Commission in Victoria, which has some maturity to it and has dealt with whole-of-life costs. After about 10 years, they realised that investing in housing was not only delivering outcomes but reducing substantial amounts of cost. I think that, as Alan's suggesting, we've really got to look at this in a systemic way. What things do we need in place? If these people with NDIS become eligible and wish to seek other options, it's not very useful for them simply to join the social housing waiting list, because that doesn't actually achieve their outcome or save the NDIS any money. It's one of these bigger system questions. I don't think the scheme or the agency are mature enough in an organisational sense to have some of these really important discussions.

CHAIR: Presumably, to take the example of the Transport Accident Commission in Victoria, there are years of actuarial data available about how that scheme works. My recollection of it is that what we've got now is not exactly what they started out with. It was modified over time. My interest here is how the NDIS can learn from the experience and, indeed, the actuarial data. A person is disabled regardless of the cause of that disability, whether it's a traffic accident or an acquired brain injury during life, at birth or whatever. If they've got a similar condition then the actuarial data is likely to say something very similar in relation to it, but it seems like the NDIA is working almost in isolation form a wealth of experience which would be available to it.

Mr Connellan : It's not that it's intentionally isolated; it just doesn't have the capacity to understand where it is. It's firefighting on so many levels that the urgent is overwhelming the important. This is important; this is not urgent in their world. I think that this is why in some ways you've got to understand where the scheme is but also as quickly as possible try to embrace that wisdom. In terms of the TAC, yes, it did do that analysis on the actuarial cost, and that's why it developed its own investment fund of $50: because it made sense. The big question for us as a community is: how do we transfer our existing operational knowledge into the NDIS operation. It's been suggested that we in the NDIS are hacking our way through the jungle next to a six-lane freeway, and I think it's a great analogy. We've got to get onto the freeway.

Mr Ryan : Go back to that report on the 24th. We've got no issues with the number of the things that were brought up in that paper, but it certainly did once again create confusion. For the first time they really started talking about terminology like 'price ceilings'. They brought in terminology like 'deregulation' and 'the very few'. That language once again creates an environment where it comes across as us still feeling this out. The report was supposed to create confidence. That was the purpose of it, but it actually did the complete opposite. It stalled. Therefore, any more language that comes out has to be explicit around the type of market you're trying to create. If you talk about price ceilings, if you're trying to encourage investment confidence, you might want to talk about prices falling so they know where they sit in that when they start to do their risk analysis.

Senator STEELE-JOHN: I would like to go to the Summer Foundation's submission. You make the observation—quite rightly—that 90 per cent of current SDA is group homes. We've spoken a lot about supply, and I do apologise if I missed this before I was able to be here, but, in terms of supply in the pipeline currently, what percentage of that is individual dwellings versus multiple-residential dwellings?

Mr Bo'sher : Good question. We've spoken a little bit about supply. Given you've asked about it again, I might really quickly explain the work that we did around supply, so people know where that data comes from. We did a survey of SDA providers across Australia late last year, asking them what supply was in their pipeline as under construction or recently completed. That survey was kind of incomplete, because some people wouldn't have filled it out, but it's our best picture of what supply is in the pipeline that we have across the country at the moment. That found that there are about 1,000 places altogether, of which 600 were driven by government and 400 were driven by non-government organisations.

We've spoken a bit about the 400 during questions today. Interestingly, what we see in that split is that a lot of the properties that were identified as being developed by government were five-bedroom properties and a lot of the properties that were being developed by non-government organisations were smaller one- and two-person properties. That's largely driven by an anomaly which is the redevelopment of residences of Stockton, Kanangra and Tomaree. That has led to a lot of five-bedroom group homes being in the pipeline, but I think that's more of a blip or a non-repeatable experience, because it's about a lot of people who lived in a big institution that's been closed down, and at the time they were planning to build 78 five-bedroom group homes. That's where you see this big stock of group homes coming into the system.

But largely we're seeing the non-government sector develop smaller dwellings. We talked a lot about the investor brief that the NDIA released in April. I think why that investor brief was so damaging to market confidence was because it's the nongovernment sector that's been taking the risk to build these properties that are generally smaller because that's what people with disabilities want—they don't want to live with four people they don't know—and it was exactly that bit of the market that NDIA kind of poured some cold water on through that investor brief, which mostly affects the nongovernment development sector.

Senator STEELE-JOHN: So moving forward, is there a view among others around the table that the ideal that we're shooting for is as close to individual properties as possible?

Mr Ryan : My response to that is that it needs to be mixed. There is a case for everything. One of the health groups that we are working with, a high-care facility in Queensland, needs to transition people into new stock. They are people who are used to living with each other. They gave a really interesting case, where there were four living in a very tight friendship or partnership group. They could not communicate verbally but were very closely related. One went to hospital and the other three got sick, and that was psychosomatic. They were saying that those four need to remain together. So there'll be situations where a share house is appropriate. But certainly, through our Youngcare Connect program, the first concern is that people say they want to live independently if at all possible. And the second one is they want to live in accommodation where the asset owner and the care provider are two totally separate people, because they feel trapped in most cases.

Senator STEELE-JOHN: But that would be the exception rather than the rule. Is that what you are saying?

Dr Grant : It has to be congruent to the needs of that individual. As Mr Andrews pointed out earlier, everybody is coming from a different situation so there needs to be a mix of urban and remote based on how you've lived and the density of housing from your background. So, for example, somebody who has a psychiatric illness may need to have other people around them. It always has to be a mixture of these things. There will be some with group housing, some with individual housing and some will want to stay independent. I really don't think it's a good idea to come down to one model, as with those five-bedroom group homes. It's reductionist model that, design wise, will always be a disaster.

Mrs Farrell : I'd like to just add to that in that I think we may not actually really have scoped out who the six per cent of people are that the NDIS intends to have SDA. I would say that there is no one housing type. I think there are a lot of people in institutions who have been in institutions for a very long time and therefore need a very robust place of living. I'm not sure that we're seeing any stock that is actually of a robust quality. There are some people—and it's been said before—who are not good at living in the community, as in that they can't go out every day. They actually need a design within the house where they actually have things to do with in that environment and can be supported in that environment safely and not reliant on going to day programs or going to day services or on outings every other day. They can't do that. They are very vulnerable people and they have been in care for a very long time. So that's why I would say that the driver needs to look at not only the environment, the house, where it's built and all the rest of it, but at the model of care that fits with that and the workforce that's required. If you have someone with Prader-Willi, for instance, an eating condition, you cannot have a regular house. It needs to have locked kitchens. It needs to have a very particular workforce. So it's a combination of things that need to come together to address the housing needs of people in the six per cent that, I think, the NDIA is focusing on.

Mr Rutherford : I think that's why it's really important to engage. Certainly with my clients, they're engaging as soon as possible with people that they think will get SDA, so it's really important to have them involved for all of those reasons. In some cases parents are co-investing or funding the bulk of those developments, and that will, hopefully, reduce demand risk over time as well, because they'll have an equity investment in those properties. It will bespoke, I think, depending on—

Mrs Farrell : Can I add another example. Alan and I have had, over the last six to eight weeks, a number of people who have been admitted to hospital from group homes. Some have now been told that they cannot return to that home. I've had one person who went to a nursing home, has pretty much destroyed this nursing home and has, this week, been admitted to hospital. He's actually doing quite well in hospital, in a very structured environment. This demonstrates a few things about the sort of environment that he would need to live in. This is coming down to the individual needs, to looking at the individual needs of a person first and not at the house, and asking: what does this person need from an environmental and a support point of view? I can't stress enough that I think we're looking at building before we are looking at what it is that we're trying to accommodate.

Dr Grant : From an architectural research point of view there is very little evidence based research on psychosocial needs. There's a lot of stuff on environmental psychology and natural base—but almost none on what it's like to have a child with a learning disability: how thick the walls need to be. We know a lot about accessibility, universal design and all of those things, but we know very little about psychosocial disability.

Mr Bo'sher : I want to take us back to the discussion we were having a little while ago, because I think these two things connect. At the moment we've got a really prescriptive approach by NDIA in determining what type of dwelling a person should live in and what type of location with what level of accessibility. There are 8,000 possible SDA prices in the price matrix, and you've got a poor planner from the NDIA sitting there trying to decide which one of those 8,000 possible prices the person should be slotted into. We've just been talking about how complex this cohort of people are in the top six per cent, and that they'll change. People will want to change from their five-bedroom group home to a three-person group home, and they shouldn't have to go back to the NDIA and constantly renegotiate this with their planner. When it comes to housing, we just think people should be approved for the subsidy and they go out and select the house that works for them, and then that price goes in the plan rather than have some poor planner try to choose one of those 8,000 prices to put in their plan, because their slashing through the jungle that Joseph described. I think we're making this harder than it needs to be.

Senator GALLACHER: How did we end up with 8,000 prices?

Mr Bo'sher : I would say that one of the learnings, and many of you would probably appreciate this—there were some issues around NRAS and the fact that we had a standard price that applied everywhere. It incentivised developments in particular places. I think there was good learnings from some of the failures of NRAS, and one of those learnings was that we want housing to be built everywhere across Australia for people with disability, so we need different location weightings and we need to pay a different amount if you're building a five-bedroom home versus a one-person unit. On the supply side, having a lot of prices is okay because every developer knows exactly what price they're going to get: they're building an apartment in Parramatta at this level, so they know they're going to get this price. But it doesn't make sense to think about that for a person with disability. If you're a 30-year-old living at home with your ageing parents you want to potentially explore living in Parramatta but also living in Penrith and living in a five-bedroom group home or a two-person home. If NDIA is really prescriptive about trying to force you to make all of those decisions before you even go out and look at what's possible it slows down the process, and it gives all of this uncertainty to providers.

Mr McLennan : The individual doesn't make that choice at the moment; the choice is made for them. In fact, they may well get an offer that's commensurate with their category, which might be, say, high physical support. It might be a house. But the decision about whether or not they are funded for a house or something else or funded to be in a group home isn't made by the individual. Even if the provider has guessed right, which I would suggest is not really our role—and I say it is a guess, because most times we don't know what the actual assessment is going to be from a functional perspective, so we're making our best guess about whether or not somebody is a high-physical-support tenant or improved livability or whatever we're trying to shoot for—it's still a guessing game: will the ultimate funding offer match what's been provided, or will it be put back on us as a business decision for us to lease the accommodation to someone with an offer that doesn't match and for us to bear the loss, as opposed to the individual being funded at a level that matches their choice, their control and their preference?

Senator STEELE-JOHN: Staying with that theme of participant choice and control, I have heard on multiple occasions that there are certain policy settings within SDA which prescribe the different types of individuals that can live with SDA participants in those dwellings, and I have heard about that causing problems with family separation, which I think Luke was alluding to slightly. Would you be able to illustrate those for our benefit?

Mr Bo'sher : Dan, you probably have more practical illustrations.

Mr McLennan : Yes. At the moment, the way the price guide works for SDA is that it assumes everybody who is a resident in a dwelling has a disability. So, with the pricing for a single-resident dwelling versus the pricing for what you get as an individual if you're in a dwelling with somebody else, it isn't quite halved but it goes down quite considerably, the premise being that that's okay for the provider because they can have somebody else with a disability in the same dwelling and receive an equivalent amount. If I have a two-resident dwelling and I lease to a participant and their spouse or their partner, that individual is funded on a shared basis, not on a single resident basis. As a provider, I've forgone the money I would have received if I had leased the dwelling to a person who had a disability, as opposed to this person's partner who does not have a disability. So I have to bear an enormous financial impost, which is very challenging.

Senator CAROL BROWN: How likely is that?

Mr McLennan : For a non-charity, very tough.

Senator CAROL BROWN: No, I mean: how likely is it that developers would bear the cost?

Mr Ryan : They won't.

Mr McLennan : The challenge is made even harder because the SDA rules and the price guide require a majority of bedrooms in a dwelling to meet the minimum requirements even though a bedroom may not actually be occupied by somebody with a disability. So for me to be able to pursue that scenario described, of leasing to a participant who has a disability and their partner who does not, I have to have a two-bedroom apartment with two fully compliant bedrooms, which will probably require me to buy a larger dwelling and incur additional costs of doing so for space which will not be occupied by a person with a disability, because it's going to be occupied by the participant's partner. So there's no capacity to have an apartment with one bedroom that meets all the minimum requirements—it might be platinum standard—and additional bedrooms which do not, to be occupied, for instance, by a participant's partner and their children. We have a dwelling in Belmont at the moment that we have leased to a lady with a disability, her partner and her 19-year-old daughter. We are considered overoccupied for the NDIA's purposes, so we receive nothing.

Senator STEELE-JOHN: Effectively, the current system massively disadvantages and disincentivises people with disability living with their families or, indeed, starting families and living together in a family unit.

Mr McLennan : We have to make offers to people at the moment on the basis that they occupy it on their own—that they don't occupy with siblings or partners—and that is heartbreaking. That is not what we want to do.

Mr Blackwood : I think what you have to see here is that this is actually happening in a scheme that's actually around individual choice, control and dignity. People are being commodified. You can sort of see where this might head: the rationale for making a choice about who is offered a property is actually at the developer's whim or the owner's whim, looking at what their vacancy risk is. You kind of think over time it's going to discriminate against people with families and older people because—

Senator STEELE-JOHN: They have to choose between getting a house or having a husband.

Mr Blackwood : Again, going back to what I said before, this is actually not the way to solve a systemic housing shortage.

Mr McLennan : The response we are given is 'It's a business decision for us, it's not the system.'

Mr Blackwood : This is the thing: we're dealing with a social problem here. A market is one lens through which to look at this, and it's not the only one, but it's unfortunately where we started. I think we've got to be really careful that we don't actually put all our store in the market.

CHAIR: It could be a sibling who wants to take care of a disabled person.

Mr Blackwood : For sure.

Mr McLennan : We think this is very fixable. We don't think this is the sort of thing that should subsist. It's quite fixable. Indeed, enabling that very scenario that you highlight, Chair, would actually save on other support costs because you get the cost efficiencies associated with the informal supports that a sibling or a partner gives.

CHAIR: If this is meant to be an insurance scheme, that's what we should be looking for.

Mr Ryan : This has affected our organisation, Youngcare, and one of our staff members, Todd. He is happy for his name to be brought forward. It's a high-profile case. Today did a whole expose on the fact he fell in love. They've just recently gotten married. We as an organisation are wanting to put Todd into our next SDA home, our dwelling. We are telling the investor that we will cover the difference so that they get the investment return that they need on that apartment, because Todd and Kat want to live together as husband and wife. These are the issues that you're dealing with on a real basis.

I also need to talk about it because I think we haven't mentioned this before. One of the things your large scale investors are concerned about is a tenancy risk in a shared living environment. We believe totally that an individual should have the choice of how they want to live, who they want to live with and where they want to live. But from an investor perspective, in the shared living that was suggested out of 24 April—

Mr McLennan : This is where both people or multiple people have disabilities.

Mr Ryan : The banks and large-scale investors are actually saying this is a massive risk for them as well, and that's stopping them. They're pumping the brakes on investing into a shared living dwelling. So if you look at a place with two bedrooms and two rents, if they don't get along and one person moves out, and then another person comes in doesn't get along with that same individual, they've got an issue—they've got a tenancy risk. They said: 'It won't be you, Youngcare, on the front page of The Australian getting rid of that person in that apartment, because we need to because we need to get an investment return on that. It will be us as bank A or bank B or investment group C.' They are now saying that is a huge risk that they need to try and digest. That's from an investment perspective—I'm not talking from a NFP perspective—but it should be considered here because it's also scaring them off coming into the space.

Mr McLennan : Particularly if there isn't funding available for premises on a single resident basis. If the assumption at play is, 'That's okay; we're just going to encourage the market to fund multiresident dwellings,' the investors do not want those sorts of risks, particularly when we've moved away. They're not licensing rooms; these are residential tenancy leases over whole dwellings. So who is the tenant and who is in control? Where you have two people with a disability and, as you say, they don't get along or where circumstances change, it's not an exercise in a normal leasing context, whereby a landlord can say to a tenant, 'You need a new roommate.' In fact, I don't think he can legally compel that, though he might have a view. It's fraught.

Senator STEELE-JOHN: Mr McLennan, you said that it was an easy fix in terms of the family issue. Could you clearly elucidate that for us, as a committee, in such a way as it might find its way into a recommendation?

Mr McLennan : We put some recommendations around that in our submission to the KPMG report. In essence, the challenge at the moment is twofold. We need to create a dwelling category in the SDA price guide that accommodates a scenario or an enrolment category whereby you can have other residents and other bedrooms in a dwelling which don't meet the minimum criteria. They should still meet the criteria that's required for planning approval for a bedroom. We don't want to create a scenario whereby we have people living in unventilated rooms and things like that and creating unacceptable dwellings. So we have some minimum standards but, fundamentally, we don't require the oversized or the platinum-sized bedrooms, for instance, for non-SDA participant residents. We don't have a cap on non-SDA participant residents if they are family members. So that should be the cap. That way we can accommodate large families, small families et cetera. Then, from a pricing perspective, we need to look at a price category or a pricing scenario whereby, if you have a family member accommodating with a participant, the drop in price doesn't drop down to assume that the other occupant is receiving SDA but drops down to reflect that they're receiving market rent.

We're not advocating for a scenario whereby family members of people with disabilities should be receiving subsidised housing via the NDIS. We're not in that space. We don't want the system. We're not proposing a framework whereby it can lead to that outcome. But, at the moment, you really do fall off a cliff. In a high-physical-support, one-bedroom one-resident apartment, the participant receives $86,000 per annum of funding. If they are funded on a two-person share basis it is $48,000. It's not a business decision when the gap is that big. The basis on which project has been funded simply can't absorb that gap. But if we set it up so the price falls by $15,000 or something that's closer to a market rental that can be bridged—that's manageable. Smarter people than me can do the research that would demonstrate what I think is self-evident, which is that you would save so much on other supports by having people with disabilities occupying with their families and their partners—leaving aside the social dimension of that.

Senator STEELE-JOHN: Yes, leaving aside the solitary dimension that everyone should have the right to be able to live with a family member or significant other cause.

Mr McLennan : Of course.

Senator STEELE-JOHN: I just have one final question, and it is for Mr Blackwood and Mrs Farrell. I am very aware that I was one of the people who wanted you guys to come along this afternoon. In relation to the issue of young people in nursing homes, I just wondered if you would, for the benefit of the committee, take us through the challenge that is experienced through the differential between ACFI funding and the funding that is delivered under the NDIS and the material impact that that has on these people in terms of the support that they need while in residential care.

Mr Blackwood : Deborah touched on that a little bit while you were out.

Senator STEELE-JOHN: Did she? Oh, you've done that.

Mr Blackwood : It relates to the fact that people end up with unmet need—people who need additional support, who may need assistance to be supported. That's not there, which means that it's the aged-care business model that actually runs level of support they need.

Senator STEELE-JOHN: The 6,000 folks that are in these situations probably reflect some of the more institutionalised people in our previously institutionally based housing system. You were speaking about the difficulties of helping those folks out of those situations and into SDA accommodation. What could we do in terms of the NDIS to better facilitate that transition for that group of people in terms of helping them to explore options and feel comfortable to make that transition?

Mrs Farrell : The first thing is that there needs to be a whole approach to understanding the needs of that person. Alan mentioned earlier that many of these people who are in an institution and have been for a long time have dual disabilities or health issues—and I refer to things like brutal diabetes, uncontrolled epilepsy, regulation of temperature issues and all these sorts of things. They require a support model out in the community that is all-encompassing. It's about understanding what it is they need in the way of environment, and I think you could do it as a streamlined approach if the NDIS actually put a body of people together. I think it comes down to policy. It does come down to having a process that actually allows those people to be taken through a planning process that is different to maybe the norm.

Senator STEELE-JOHN: So a tailored stream or pathway?

Mrs Farrell : Yes.

Mr Blackwood : One that involves multiple systems. You can't just apply a disability-only planning process for people like this. There has to be health, housing and other systems in a joined up planning approach. A significant limitation of the planning design is that it really is only half relevant to this group.

Mr Ryan : An example of a disconnect is Youngcare has at-home-care grants in every state of Australia. People can apply for something that will keep them in their home and keep them out of nursing homes, aged care or whatever. A cough assist machine, for example, is something you can't get under your NDIS plan. They say that's part of the health system and the health system comes back and says, 'No, that should be part of your plan.' If you have cerebral palsy or muscular dystrophy and you don't have a cough assist machine, you drown in your own phlegm. We had a father approach us. Three times in the last month he had presented his blue son to triage at the hospital. He was watching his son suffocate in his own phlegm. He pleaded with us to purchase a cough assist machine for his son. That's a disconnect.

Senator CAROL BROWN: We've been talking about how many participants get SDA and the delays. You've talked about what you're doing in terms of developing and building. Does the NDIA collect any data around accommodation types? Do they talk to you about how many participants may be eligible for SDA? Do they collect any data that they share with you?

Mr Bo'sher : I think a consistent theme from just about anyone operating in the housing space is that more data would help them to move forward and build more housing. All the NDIA and the Commonwealth have shared is a headline number of 28,000 people across the country. Recently they published a state-level breakdown of how many people had been approved so far, but what we need is much more granular data than that—how many people by local government area have been approved for SDA and what levels of support they need. That would be a huge help to people looking to build SDA, because people want to be building in the right places. They want to be building where people are getting this approved.

Mr Ryan : For some reason—and this is how it's coming across—there's a reluctance to provide information to the sector to allow us to make decisions. It's almost as if there is a lack of trust from the investment sector or the development sector—'You guys coming into this are getting well paid, so you work it out.' I'm not sure if that's the case. I've got nothing to base that on. It's just the way it's coming across. Why aren't you providing information that actually stimulates the market the way it should be done?

When I was speaking to the NDIS recently there seemed to be a misunderstanding that, if we get this right this year, we will have all this SDA stock and dwellings flooding the market next year. But if you look at a normal project time line—

Senator STEELE-JOHN: They've never built a house!

Mr Ryan : KPMG comes out and the language is just the way we need it to happen. In September you start re-engaging your investment partners. Then you do concept designs and you get DA. Then you start getting something out of the ground. You're not going to see any new stock in any great numbers until about March-April 2020.

Senator CAROL BROWN: But you do need certainty.

Mr Ryan : Correct.

Mr Bo'sher : That's right. In the work we do with PricewaterhouseCoopers on modelling the need for SDA investment we're talking about $4.8 billion of new investment being needed to build these 12,000 new places. We're not talking about small amounts of money. The institutional investors that are coming together to put up $4.8 billion of new investment aren't going to do that with an absence of data about where the housing is needed, so it's really critical.

CHAIR: I thank you all for your participation. We very much appreciate it. It's been very interesting and will be, hopefully, useful for our further deliberations. Thank you very much for participating today. I thank the secretariat and Hansard.

Committee adjourned at 15:06