This is part two in a series. For part one, click here.
Want an “ultra-high yield investment opportunity”? Returns of up to 17%? Thanks to “generous” NDIS funding you too could share in this NDIS-SDA “opportunity”.
That’s the dazzling sales pitch to investors made by Brisbane real estate agency SDA Smart Homes Australia, which last year entered the new, burgeoning market in specialised disability accommodation (SDA), set loose by federal government incentives.
“Such a worthy cause,” the pitch goes, “enhanced by the knowledge that over the next two decades of ownership, the SDA Commonwealth funding model could pay you around $2 million to provide this specialist disability housing opportunity. That’s the transaction summary in a nutshell.”
NDIS Investing, too, advertises “exceptional” returns of 10% to 14%, totalling between $25,410 to $64,241 a year, with the killer line “NDIS Investing: is there anything safer than having the federal government paying your rent?”
The sales pitch might be blunt but it captures the truth that the federal government’s steps to make disability housing attractive have created an investment honey pot for all comers.
The government has done so by creating a market which did not exist, to build disability ready homes for some 28,000 NDIS “participants”. It’s expected to cost the insurance scheme $700 million a year, creating a disability housing market worth, ultimately, an estimated $5 billion.
Attracting right and wrong investors
To encourage growth in the sector, the government — after some initial hiccups and lack of enthusiasm by investors — has set SDA payment rates at lucrative levels. SDA owners receive a base price combined with rent contribution — usually a quarter of someone’s disability support pension. They can earn up to $83,000 per year.
Jacob Edwards, a senior manager at Bank Australia and treasurer at a new SDA industry group Specialist Disability Accommodation Alliance, told Inq the government’s aim was to get housing on the market, fast.
“One of the challenges [the sector] has faced is there have been lots of inquiries from people who see dollar signs, but consider it a conventional investment — not a people-based scheme,” Edwards said.
One sceptic of the government’s approach is Professor Christine Bigby, Director of La Trobe University’s Living with Disability Research Centre, who described the SDA market as a “free-for-all”.
“The issue is that there’s an ideological drive to rely on the market to deliver services without the planning work being put in to create a proper market. No needs-based tendering has been done so you have an oversupply in some areas and undersupply in others, ” she told Inq.
The SDA scheme is big business for some, underwritten by the taxpayer. Over 800 providers have joined the fray. Some are property developers and real estate firms who have bolted on an SDA component. The group also includes church and community organisations usually with charity status. Boards have become packed with accountants, real estate agents, lawyers, bankers and venture capitalists.
The big names flocking to the market
As we reported yesterday, former cabinet minister Michael Keenan stepped into the SDA business in August last year within three months of leaving parliament. He heads a company which has the financial backing of one of the biggest names in the Australian disability services business, Megan Wynne, founder of Advanced Personnel Management (APM). Wynn’s co-investor is Michael Anghie, a former managing partner of EY consultants who works with Wynne as APM’s Group chief executive.
Other prominent names in the revolving door include:
Rob de Luca
Robert De Luca, CEO of the National Disability Insurance Agency (NDIA), suddenly resigned in May last year with immediate effect before the federal election.
De Luca stepped straight into a new job as CEO of Zenitas Healthcare, a community health organisation which had been acquired by the private equity firm of Adamantem Capital Management and Liverpool Partners.
Zenitas this year completed a development with 15 SDA apartments, in partnership with a home building company.
Punshon was national director of the NDIS for six years before jumping ship to PwC consultants last year. PwC was one of the first consulting firms working on SDA.
Maynard is a key player in the SDA industry, with a career that has crisscrossed government, the private sector and the NDIA. Maynard chairs the SDA Alliance, an industry body set up to “constructively engage” with the government on the growth of the SDA market. Maynard is also chair and non-executive director of property developer Casa Capace which aims to build $1 billion worth of disability homes around Australia.
Maynard was previously a deputy CEO of the NDIA, from October 2015 to April 2017, leaving along with other senior executives within a year of the NDIS’ troubled rollout. Late last year Maynard was back, appointed to an industry consultative group for the troubled NDIS Quality and Safeguards Commission.
Before the NDIA Maynard spent 10 years as right-hand man to former Queensland LNP premier Campbell Newman. He had been chief executive of the Queensland Public Service commission when Newman took the axe to the public service. He was among the first to move on when the Palaszczuk government took over in 2015.
Maynard is also a leading Pentecostal figure. For the last four years, while second in charge at the NDIS, Maynard has chaired a sub-committee of the national executive of the Australian Christian Churches which covers Australia’s Pentecostal churches including Prime Minister Scott Morrison’s Horizon Church. Maynard’s background may stand him in good stead for his dealings with NDIS Minister Stuart Robert, another Pentecostal Christian.
Choice, or a neo-liberal service model?
The SDA model delivers on the NDIS promise that it would provide choice and control to people with a disability. According to Bigby, the ideal of choice and control has been promoted, for different reasons, by both disability activists and neo-liberal economists.
Yet Bigby doubts if the model necessarily achieves the ideal.
“There is no evidence to suggest that if you have a free market and you regard people with disabilities as consumers then they will have greater choice and control,” Bigby said.
“There is no possibility for someone with a severe intellectual disability to get up and walk away if they don’t like the service they’re getting. It’s a model that works for people surrounded by resourceful and educated family supporters.
“There is growing evidence that those who have benefited most from the NDIS are people with strong advocates.”