Shorten’s growing NDIS bill enough to give Chalmers grim outlook

No wonder Jim Chalmers is worried about the budget as NDIS spending explodes under Bill Shorten.

A month ago I pointed out that despite his long face, Jim Chalmers’ biggest problem framing his first budget would be working out what to do with the extra billions in tax he’s going to collect.

It turns out the current estimate is that across the four-year forward estimates, Treasury will rake in an extra $100 billion.

The Government says the extra money is explained by the higher prices we’re getting for exports and the current strength in the labour market, in other words, how much income tax we’re paying.

The exact mix between the two is still a mystery.

In the lead up to Dr Jim’s big reveal, the stress has been on commodity prices.

So it will be interesting on Tuesday night to find out how much is down to Russia, etc, and how much will come out of workers’ pockets.

Especially as a large chunk of that money will be raised because inflation is driving bracket creep and will continue to hit everyone earning more than $45,000 a year until the middle income tax cuts kick in on July 1, 2024.

As everyone knows by now, the Doc thinks these tax cuts won’t be good for the budget and shouldn’t go ahead as they are presently legislated.

But, thanks to the intervention of the prime minister earlier this month, it’s clear they’re safe for the moment.

Treasurer Jim Chalmers. Picture: NCA NewsWire/Gary Ramage

It’s equally clear, however, from the way he’s been talking, that Chalmers isn’t going to give up prosecuting the argument for getting rid of them.

His case rests, of course, on the “spending pressures” we have been hearing about so much lately, that is to say forecasts more money is to go out the door, largely on defence, aged care, health care and the NDIS.

The growth is indeed eye-watering: for the next 10 years the federal spending on hospitals will increase at annual rate of 6.4 per cent Treasury estimates, while aged care will grow at 5.8 per cent.

The latter is almost certainly an underestimate as it doesn’t include the pay increases to nursing home workers that Fair Work is going to hand down with the government’s blessing.

This growth is nothing, however, to the 12.1 per cent extra a year we are forecast to spend on the NDIS for the next four years.

Actually, we’ll be lucky if it only grows by that much because a recent review found NDIS recipients are spending only 80 cent of what they’re entitled to spend, which means if they get their skates on, the cost of the NDIS could be 20 per cent higher even if no one else joins the

scheme.

More people are going to be joining of course, if only because so far only 37 per cent of disability support pensioners are on it.

National Disability Insurance Scheme Minister Bill Shorten. Picture: NCA NewsWire/Dylan Coker

Announcing last week that over the next four years it will cost $8.8 billion more than was estimated back in March, Bill Shorten said the NDIS was “arguably” the “best addition to the social framework of Australian society in the 21st century”.

Whether that is so, is as Shorten suggests, arguable.

What is unarguable is it is the most expensive and getting dearer by the year, with expenditure set to hit $50 billion by 2025.

Last week he announced there will be a review into its sustainability, something that had been promised before the election, a year ahead of schedule. From the sounds of things, however, reining in costs wasn’t exactly front of mind.

“Labor’s NDIS Review will restore the Australian community’s trust and confidence in this critically important scheme. We will take into account what people already said even if it was not acted on previously,” he said. “It will apply best-practice policy design that supports people with disability through genuine engagement and co-design with people with a lived experience.”

In Opposition, Shorten was very good at highlighting mishandling of the NDIS, always ready with sad stories of people who ought to be getting more. He also ran a very successful scare campaign against the previous government’s view that people joining the scheme – for life, remember – should in certain circumstances be required to undergo independent medical assessments.

You might have assumed that as the full scale of the exploding NDIS spending has been made clear to him since he became minister, Shorten might have reflected on the wisdom of that scare campaign.

But, so far anyway, there hasn’t been much evidence that Shorten is interested in doing much to control costs.

To be fair, he’s talked up the fraud – something independent assessments would help fix – but he’s shied away from talking about doing anything about growing numbers joining the scheme, especially those with mental health conditions.

Indeed, though walked it back, he even briefly floated the idea of adding ADHD to it.

In September he appointed Kurt Fearnley as the chair of the board. He said having more people with disability in leadership positions will “rebuild trust with the disability sector”.

If the minister in charge of a $50 billion welfare scheme thinks his primary role is to be an advocate for the people accessing, rather than people who are paying for it, no wonder Grim Jim has such a long face.