Federal Court sets precedent on ‘day-to-day living cost’

The Federal Court defined day-to-day living cost’ in the NDIS. Chris outlines what this case means, for now - and into the future with any new legislation.

By Chris Coombes

Updated 9 Jul 20249 Jul 20246 min read
Brown and white picture of scales, gavel, courthouse and a document

It’s not every day that an NDIS matter makes it all the way to the Federal Court – there’s been only a handful of notable decisions handed down over the Scheme’s life. But last week the Federal Court answered this question: what does “day-to-day living costs” mean?

The definition has huge ramifications for the Scheme. Unlike the Administrative Appeals Tribunal (AAT), rulings by the Federal Court are precedent setting and must inform ongoing interpretations of the law. But it’s a ruling based on the current legislation. The government is currently trying to pass amendments to legislation through parliament that will fundamentally change how the Scheme works. This will also mean new transitional Rules, which could change the definition of a day-to-day living cost.

So what does this new case tell us about what should be included in those Rules, and how they should be designed?

The case

The Applicant, Mr W, has a disability that reduces his function over time. He moved house because his old home was no longer accessible. He asked the NDIS to cover the moving costs, including stamp duty, conveyancing fees and removal costs. But the NDIA said no. Whether the NDIA should’ve funded Mr W’s moving costs came down to this: were Mr W’s costs of moving home “day-to-day living costs”?

The law

As the law is currently written (as of the 4th July 2024, noting it could be about to change), before a support can be funded, the NDIA needs to be sure it is reasonable and necessary (according to s34 of the NDIS Act).

But there are also Rules currently in place that spell out what the NDIS cannot fund. Rules are legislative instruments that provide more detail about how the Act should be implemented.

The Supports for Participants Rules say a support will not be provided or funded by the NDIS if (among other things):

  • “it is not related to the participant’s disability” (r 5.1b); or
  • “[…] it relates to day-to-day living costs (for example, rent, groceries and utility fees) that are not attributable to a participant’s disability support needs” (r5.1d).

Day-to-day living costs: A term in urgent need of a definition

Rule 5.1(d) about day-to-day living costs desperately needed clearing up. The AAT has produced a few different definitions of day-to-day living costs, but these don’t always align. 

On gym memberships, the Deputy President said, “While the Agency may be correct in saying that many people engage in fitness activities at a gym, it does not follow that the costs of gym membership ‘relates to day-to-day living costs’. In my view, it is in the nature of discretionary spending for those who do not suffer [sic] from a disability”. The Tribunal also followed this approach in MMBX v NDIA, where a participant requested a microwave and a kettle.

The Tribunal has also, in a case relating to an air conditioner and one relating to an accessible vehicle, suggested day-to-day living costs relate to how often the purchase is needed. In these two cases, the Tribunal understood day-to-day living costs regular and ongoing expenses, as opposed to one-off or occasional purchases.

Confused? If the AAT can’t reach agreement, how are participants and planners supposed to know how to apply the Rules? In this context of confusion, Judge Perram of the Federal Court struts in.

How did the Federal Court define day-to-day living costs?

Judge Perram defined day-to-day living costs as, “those everyday expenses which are incurred in the course of living for the purpose of living.” In other words, the NDIS won’t fund ordinary necessities of daily living, such as rent or groceries.

Judge Perram described moving costs as “extraordinary” even among people lucky enough to have the choice to move. For Mr W, moving costs were not day-to-day living costs. They were infrequent purchases that weren’t ordinary or related to the costs of daily living.

The Judge added, even if Mr. W’s moving costs were in fact day-to-day living costs, the NDIS could have paid for some of them if they solely and directly related to his disability. This is because, in the Rules, there’s what is called a “carve out” which says when the ban on funding day-to-day living costs doesn’t apply. Rule 5.2(a) says:

“The day-to-day living costs referred to in paragraph 5.1(d) do not include the following (which may be funded under the NDIS if they relate to reasonable and necessary supports):

(a) additional living costs that are incurred by a participant solely and directly as a result of their disability support needs;”

In other words, the NDIS can fund reasonable and necessary supports that are day-to-day living costs, when the need for that day-to-day living cost arises solely and directly from disability support needs.

Although Judge Perram didn’t need to apply rule 5.2(a) (because moving costs aren’t day-to-day living costs), he wanted to clear up what “solely and directly” meant for other people. The Judge found the NDIA cannot fund day-to-day costs (which may be needed for one disability-related reason) when the costs would arise anyway even if the person did not have a disability.

Implications for participants

Besides a win for Mr W, there is great value in this decision for other participants in the way it clears up what a day-to-day living cost actually means. Unlike the Administrative Appeals Tribunal, the Federal Court is… well… a court. And a Court’s words are authoritative – they create law. Their decisions should be followed, unless parliament creates a new law saying something different (more on that soon).

So does this mean every participant can automatically get their moving costs funded by the NDIS? No. Each person and context is different. The NDIS and the AAT needs to first look at each person’s situation as it applies to section 34 of the NDIS Act, and then the Rules. The NDIS can still say “no” to that support using one of the reasonable and necessary, criteria or another Rule that isn’t the day-to-day living cost one. For example, the NDIA might find moving costs are: not related to the person’s disability; not value for money; not most appropriately funded by the NDIS; and so on.

On the one hand, this decision lessens the ability of the NDIA to say no to funding occasional or one-off expenses, like moving costs, purely for the reason that they are day-to-day living costs. But then, the decision makes it easier for the NDIS to refuse to fund day-to-day living costs when the purchase doesn’t solely and directly relate to the disability – this is a really high bar.

New Rules - and transitional Rules - are coming

Clearing up this specific Rule comes at a funny time in the Scheme. The ‘Getting the NDIS back on Track Bill’ is tracking through the parliament. And if it passes, it will give Rule-making powers to the Minister that some have described as “God-like”.

For example, the transitional Rules that define an NDIS support will arrive soon after (if) the Bill passes. These Rules will name what is “in” and what is “out” of the NDIS. They will be transitional Rules, because they will only be in place until the states and territories can agree with the federal government on permanent rules. The Minister could decide complex matters like the wording “day-to-day living costs” within as few as 28 days after the Bill has passed parliament, which is the earliest point some of the new powers can be used. The Senate Inquiry recommended the government release a public draft of transitional Rules as soon as possible.

The debates over what is a “day-to-day living expense” at the AAT — one of many fuzzy phrases in the Rules — show that choosing the right words won’t be easy. Each decision has a financial, human rights, and policy consequence.

Negotiations of this importance are difficult at the best of times. And it mightn’t get easier. Currently, almost all state and territory governments are held by the Labor party, like the federal government. But governments change and it could get harder to get all the parties to agree on wording. This increases the need to get these “transitional” Rules right early, as they could be in place for a long time. And while the amended Bill lists co-design as a key principle, there is no actual requirement for government to co-design the Rules.

The Bill creates a reality where the government could be up late doing that group assignment, on its own, the night before it’s due. But unlike group assignments, everyone actually wants to be involved. The two hundred thoughtfully-crafted submissions to the NDIS Senate Inquiry reveal just how much skin is in this game. Rules of such significance demand the collective wisdom of disabled people and their families, as well as the wisdom of the federal court and AAT, and all of us who want to help clear up things like “day-to-day living costs”.

Can we afford to rush it?

Check out: the Federal Court decision.

Submissions to the Senate Inquiry are open until the 12th July 2024.

I am not a lawyer, and this is general information. Do seek legal advice as this relates to your situation. Or seek NDIS appeals advocacy at Ask Izzy.


Chris Coombes

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