Even Treasury's is raising alarms. So why is the Government doubling down on the NDIS path, when better alternatives exist?
PHYSICAL DISABILITY AUSTRALIA LTD
Physical Disability Australia demands the Government take NDIS 2.0 seriously: a costed pathway to sustainability that protects participant supports
Canberra – Physical Disability Australia (PDA) has an honest question for the Albanese Government: why press on down a path that Treasury’s own forecasts show is unsustainable, when there are credible alternatives that are easier to implement and bring far less pain for both governments and participants?
The numbers are not subtle. Budget Paper 1 forecasts NDIS spending of $52.3 billion in 2025–26. The Productivity Commission’s 2017 projection was $28.5 billion for 2024–25 for participant supports alone (about $30.8 billion including operating costs and over-65s). That is a nominal gap of $21.5 billion a year, and the Government has not closed it.
The alternative is NDIS 2.0: A strategic pathway for sustainability by Cain Beckett FAICD. Mr Beckett is no outside critic. He is an economist, an NDIS participant and the inaugural head of Markets and Pricing at the National Disability Insurance Agency. He established the scheme’s approaches to market regulation, safeguards and pricing, wrote the Specialist Disability Accommodation policy framework, and sat on the first NDIA executive team. He knows what the NDIS was meant to be.
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$21.5bn Annual gap between 2011 Productivity Commission forecast and current cost
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$7–15bn Estimated annual savings from four reforms within two years
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$0 Reduction in participant supports required, and no change to NDIA legislation
|
A fix that does not cut supports
Government reforms that focus on cutting back services, often essential services, be it in health, education or social services are always less effective than anticipated when it comes to implementation. Reforms particularly in human services are hard to implement and bureaucrats typically overestimate the efficiencies and savings on offer.
In the May 2015 budget employment income matching, (now known as Robodebt) was projected to save the government more than $1.5 billion. Instead, the $ net cost so far is about $1 billion.
The NDIS cost blow-out traces back to design compromises made at launch. Four reforms that could save an estimated $7 billion to $15 billion a year within two years need no change to the NDIA’s enabling legislation and no reduction in the level of participant supports.
- Streamline claims (about $4 billion a year): pay small plans under $40,000 quarterly in advance, and use card-based, point-of-sale payments for larger plans. That cuts provider administration, errors and fraud. The ANAO estimates $1.4 billion in fraud and payment-error losses in 2022-23 alone.
- Deregulate and steward the market (about $1.5 billion a year): replace more than 600 price-capped items with simpler pricing, and allow co-contributions where caps remain, as in Medicare.
- Commission SIL and SDA (about $2 billion a year): Supported Independent Living is about 34% of payments but serves around 5.7% of participants. According to the NDIA the average annual plan budget for a participant with SIL supports is $488,200 nearly double the cost at launch.
- Build real insurance capability in the NDIA (at least $3 billion a year): use the agency’s own data for guided planning, ending the reliance on costly medical reports and slow annual substantiation.
“The NDIS was designed as an insurance scheme to reduce the lifetime cost of care. What we have built is a welfare payments system. Fixing it takes motivation and determination, not a new law and not cuts to people’s supports.”
Suzanne Gearing CEO, Physical Disability Australia
Better guarantees for participants
These reforms would return the NDIS to its intended form: a social insurance scheme and a consumer directed market, built to reduce the lifetime cost of care and lift employment for people with disability and their carers. Neither foundation of the original business case has been delivered. Faster, simpler payments and fund-by-default plans would give participants the certainty they are denied today by an endless cycle of delays, reports and reviews.
Questions the Government must answer
- Why are governments still funding more than $1 billion in reviews and pilots, instead of committing to a single 10-year master plan?
- Has the Government costed the four reforms in NDIS 2.0? If not, why not?
- Why stay on a path that its own Budget forecasts show is unsustainable, when one with stronger guarantees and less disruption is on the table?
PDA calls on the Minister for the NDIS and the Treasurer to publish an independent costing of the four reforms, and to involve people with disability in any redesign from the start. Participants cannot afford more years of drift.
About us:
Physical Disability Australia demands the Government take NDIS 2.0 seriously: a costed pathway to sustainability that protects participant supports
Canberra – Physical Disability Australia (PDA) has an honest question for the Albanese Government: why press on down a path that Treasury’s own forecasts show is unsustainable, when there are credible alternatives that are easier to implement and bring far less pain for both governments and participants?
The numbers are not subtle. Budget Paper 1 forecasts NDIS spending of $52.3 billion in 2025–26. The Productivity Commission’s 2017 projection was $28.5 billion for 2024–25 for participant supports alone (about $30.8 billion including operating costs and over-65s). That is a nominal gap of $21.5 billion a year, and the Government has not closed it.
The alternative is NDIS 2.0: A strategic pathway for sustainability by Cain Beckett FAICD. Mr Beckett is no outside critic. He is an economist, an NDIS participant and the inaugural head of Markets and Pricing at the National Disability Insurance Agency. He established the scheme’s approaches to market regulation, safeguards and pricing, wrote the Specialist Disability Accommodation policy framework, and sat on the first NDIA executive team. He knows what the NDIS was meant to be.
|
$21.5bn Annual gap between 2011 Productivity Commission forecast and current cost
|
$7–15bn Estimated annual savings from four reforms within two years
|
$0 Reduction in participant supports required, and no change to NDIA legislation
|
A fix that does not cut supports
Government reforms that focus on cutting back services, often essential services, be it in health, education or social services are always less effective than anticipated when it comes to implementation. Reforms particularly in human services are hard to implement and bureaucrats typically overestimate the efficiencies and savings on offer.
In the May 2015 budget employment income matching, (now known as Robodebt) was projected to save the government more than $1.5 billion. Instead, the $ net cost so far is about $1 billion.
The NDIS cost blow-out traces back to design compromises made at launch. Four reforms that could save an estimated $7 billion to $15 billion a year within two years need no change to the NDIA’s enabling legislation and no reduction in the level of participant supports.
· Streamline claims (about $4 billion a year): pay small plans under $40,000 quarterly in advance, and use card-based, point-of-sale payments for larger plans. That cuts provider administration, errors and fraud. The ANAO estimates $1.4 billion in fraud and payment-error losses in 2022-23 alone.
· Deregulate and steward the market (about $1.5 billion a year): replace more than 600 price-capped items with simpler pricing, and allow co-contributions where caps remain, as in Medicare.
· Commission SIL and SDA (about $2 billion a year): Supported Independent Living is about 34% of payments but serves around 5.7% of participants. According to the NDIA the average annual plan budget for a participant with SIL supports is $488,200 nearly double the cost at launch.
· Build real insurance capability in the NDIA (at least $3 billion a year): use the agency’s own data for guided planning, ending the reliance on costly medical reports and slow annual substantiation.
“The NDIS was designed as an insurance scheme to reduce the lifetime cost of care. What we have built is a welfare payments system. Fixing it takes motivation and determination, not a new law and not cuts to people’s supports.”
Suzanne Gearing CEO, Physical Disability Australia
Better guarantees for participants
These reforms would return the NDIS to its intended form: a social insurance scheme and a consumer directed market, built to reduce the lifetime cost of care and lift employment for people with disability and their carers. Neither foundation of the original business case has been delivered. Faster, simpler payments and fund-by-default plans would give participants the certainty they are denied today by an endless cycle of delays, reports and reviews.
Questions the Government must answer
· Why are governments still funding more than $1 billion in reviews and pilots, instead of committing to a single 10-year master plan?
· Has the Government costed the four reforms in NDIS 2.0? If not, why not?
· Why stay on a path that its own Budget forecasts show is unsustainable, when one with stronger guarantees and less disruption is on the table?
PDA calls on the Minister for the NDIS and the Treasurer to meet with PDA and without delay, to publish an independent costing of the four reforms, and to involve people with disability in any redesign from the start. Participants cannot afford more years of drift.
Contact details:
Suzanne Gearing, CEO, Physical Disability Australia | [email protected] | 0484 187 208
