Premiers revolt over federal NDIS law, fearing cost time bomb

State premiers are seeking urgent changes to a federal bid to overhaul the National Disability Insurance Scheme amid growing fears it will leave them with uncosted financial exposure to offset the soaring cost of the $42 billion scheme.

The push comes after the premiers convened a sudden meeting on Monday to present a united case to Canberra to rethink the controversial proposal to set up a new disability system in the states and territories for children and others who may not need to join the NDIS.

The state premiers are up in arms about the NDIS changes and what it will mean for their budgets.Credit:

With the new disability plan to be put to federal parliament within days, the premiers want Government Services Minister Bill Shorten to amend or delay the draft law so all sides can be consulted on the full impact on an estimated 2.5 million Australians.

The extraordinary move comes after “red-hot anger” within state governments about the speed and scale of the federal changes, which aim to set up foundational services in locations such as schools and childcare centres for children to receive support without going on the NDIS.

Prime Minister Anthony Albanese sealed the deal with the premiers and chief ministers at a national cabinet meeting last December, but the outcome hinges on detailed agreements about funding and building the new services.

Shorten has tried to shore up support for the plan in calls with state and territory ministers over the past week, but the key stumbling block has been the fear of an uncosted fiscal exposure that could weaken the ability of the states and territories to fund other services.

Asked about the state concerns, Shorten said the national cabinet meeting last December had agreed on changes to make sure “every dollar” of assistance went to those the NDIS was designed to help.

“We are not going to put change in the too hard basket, because people with disability deserve better,” he said.

The meeting on Monday, held at 5pm, resolved to ask Shorten to delay the draft law because the scope of the plan was inconsistent with the national cabinet agreement last December.

The meeting was convened by South Australian Premier Peter Malinauskas, who chairs the Council for the Australian Federation – the forum for premiers and chief ministers for talks that do not include the prime minister.

In a sign of the concern over the draft law, the meeting resolved that Malinauskas would write to Shorten to ask for the bill to be delayed.

In one policy note circulated among the states and territories, officials warned that there was not enough consultation on the way the proposed federal law would remove the current requirement for the states and territories to be consulted on funding changes.

“The amendments fundamentally change the nature of the NDIS and will increase pressure on other services,” it said.

The new state and territory disability system will be called “foundational supports” and is intended to service about 2.5 million Australians with a disability who need less intense support than the NDIS, which services 646,000 people.

In the December agreement, Albanese said the Commonwealth would cover half the costs of delivering new services through state systems, mainly health and education, while states and territories would pay the other half.

The aim is to ease demand on the NDIS by stepping up state and community-level services such as home support, aids and equipment, and psychosocial services for people with mental illness outside the scheme.

But it will have a particular focus on boosting help through schools for children with autism and developmental delay, who have been joining the scheme in rising numbers due to a lack of support in the mainstream education system.

More than 9 per cent of five- to seven-year-olds have joined the NDIS because they can’t get sufficient help outside it.

Children with developmental delay were the main drivers of the scheme’s growth last quarter, with 11 per cent more joining than had been forecast just months prior. The average payment for those children over the six months – $14,000 per participant – was also 19 per cent more than expected.

The proposed changes are central to the stated federal goal of limiting the annual growth in the NDIS to 8 per cent. The $42 billion scheme is one of the federal government’s fastest-growing budget pressures and is forecast to cost more than $100 billion in a decade unless the system is changed.

But there are reservations about the capacity of state education systems to step up support for the roughly 20 per cent of Australian children who have learning difficulties or developmental concerns, given schools are already struggling with workforce shortages and stretched resources.

The head of parent organisation Autism Awareness Australia, Nicole Rogerson, said states were facing an enormous task in taking on more responsibility for children with disabilities, but she was not convinced they all understood the scale of the task.

“The federal government isn’t wrong to say schools need to step up. But it’s a massive change and the schools aren’t ready,” Rogerson said on Monday.

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