Despite growth rate cut and best intentions, Australia’s NDIS remains an unsustainable program

Reforming the National Disability Insurance Scheme has proved full of pitfalls but the Albanese government’s structural improvements that are predicted to slow the annual rate of growth from 13 per cent to 8 per cent will not be enough.

Disability minister Bill Shorten was the architect of the NDIS, which now has unsustainable cost growth. Credit: James Brickwood

The $48.5 billion (rising to $52.3 billion next financial year) program costs taxpayers more than the defence budget, the education budget, aged care, Medicare, federal hospital spending and the Pharmaceutical Benefits Scheme. Within a decade, it’s on track to outstrip the age pension.

The NDIS became the big unknown in Tuesday’s budget, but even if the government manages to rein in the runaway growth, it threatens to overwhelm the program and future budgets.

The NDIS has been growing since it was launched in 2013. Initially, the scheme was expected to grow at a peak of 4 per cent per year, but it spiralled to more than 20 per cent under the former Coalition governments. Following Bill Shorten’s spending crackdown – which included rooting out fraud and locking in five-year personal plans – Labor reduced spending growth to 10.3 per cent. But the customers keep coming and the Albanese government remains outnumbered.

Despite Productivity Commission predictions that the NDIS would cover about 490,000 participants, more than 706,000 Australians are on the program, a 9 per cent uptick from 12 months ago. The total is expected to top 1 million participants by 2034.

With sign-up rates expected to increase and average payment costs surging, Grattan Institute research suggests the federal government will struggle to constrain growth to just 8 per cent. Even if it could be achieved, it would far exceed growth in comparable national programs.

Most other social programs grow at closer to 4 per cent to 5 per cent annually, which allows for wages and population growth. Meanwhile, the NDIS failed to achieve its original goals and is groaning under the weight of unsustainable work volumes, but adjusting the scheme to reality requires treading such a fine line that politicians have dared not take the first step.

However, Treasurer Jim Chalmers resisted pressure to further rein in the NDIS blowout just days before delivering the budget when the teal independent Allegra Spender became the first MP with the courage to demand larger cuts to the program. “The NDIS is a proud achievement, but it simply cannot … keep growing at 8 per cent per year,” Spender wrote in the Australian Financial Review.

Spender is right. Whoever wins the election must deal with the NDIS. Both Labor and the Coalition should explain how 8 per cent growth is sustainable and how they intend to pay for it. For starters, could another hike in the Medicare levy be a way of funding the ballooning NDIS?

The failure of governments to make the NDIS more sustainable will also have the effect of harming the very people most affected by it: the users and their carers.

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