Budget 2016: NDIS funding blowout continues to grow

The hole left by Labor’s NDIS funding strategy will be much bigger than previously forecast.

The structural issues in the NDIS finances will its funding out more than $6bn by 2023-24.

The hole left by Labor’s NDIS funding strategy will be much bigger than previously forecast, rising to more than $6 billion just a few years after the scheme is up and running.

The Coalition had previously revealed the federal government’s share of the $22bn National ­Disability Insurance Scheme was only partly covered by the rise in the Medicare levy and that the gap at full rollout in 2019-20 will be $4.4bn.

But the structural issues in the scheme’s finances will blow that figure to more than $6bn by 2023-24.

Tuesday’s budget contained savings and redirected cash of $2.1bn for the NDIS Savings ­Account, which the government will use to squirrel away cash to pay for the giant scheme, which will enable 460,000 people with severe and profound disabilities to be given support to live and partici­pate in the community.

When Labor set out a 10-year-funding plan for the NDIS, which it began a year ahead of schedule, it included private health insurance reforms, retirement income changes and “other long-term ­savings”.

While the Medicare levy raises a $3.9bn share for the federal government (there is more for the states) in 2019-20, existing funding contributes $1.1bn and redirecting specialist disability service funding provides another $1.8bn, the gap requires long-term savings.

Labor proposed changes to fringe benefit tax concessions and net medical expenses and amended the indexation of tobacco excise and increases to import processing charges.

Many of the measures — like such as the $6.5bn, 10-year superannuation changes — were ­announced before the budget with the implication they would be used to repair the budget bottom line, which at that stage was heading to an $18bn deficit.

“At the time the NDIS was created, Labor was predicting a surplus of $1.5bn in 2012-13,’’ Social Services Minister Christian Porter said.

“In reality, Labor delivered a deficit of $18.8bn in that year and every deficit Labor caused from 2012-13 on would have been even worse but for the fact that what savings they made went straight to make the bottom line look better.’’

The NDIS Savings Account was stacked in this week’s budget with other long-term savings, partially the result of a $1.4bn saving by eliminating the carbon tax compensation for new welfare ­recipients.

Under the arrangements, new age pensioners will lose more than $14 a fortnight and allowance ­recipients, like those on the dole, will lose $8 a fortnight.

Labor’s disability reform spokeswoman, Jenny Macklin, said the budget would leave people with disability, carers and other pensioners hundreds of dollars worse off.

“By linking the NDIS to these new cuts, Malcolm Turnbull is only fuelling uncertainty about his commitment to the scheme,” Ms Macklin said.

“What will he do if he cannot legislate these new cuts? Will he cut or cap the National Disability Insurance Scheme?

“Will the NDIS be delayed under a Turnbull government?”

A spokesman for Ms Macklin told The Australian he had “stopped caring, bothering” about explaining Labor’s funding of the scheme.