Budget 2017: $55.7bn funds gap bridged by savings, plus imposts

A $55bn NDIS gap will be filled by upping the medicare levy, savings from other areas and a raid.

 

A $55.7 billion funding gap for the National Disability Insurance Scheme will be filled by another half-percentage-point rise in the Medicare Levy, savings from other portfolios and leftover money from two government funds.

The levy will rise to 2.5 per cent of taxable income in July 2019 when the serious costs of the NDIS begin, raising more than $4bn a year and a total of more than $30bn over the forward estimates.

Uncommitted money from the Building Australia Fund and the Education Investment Fund — a universities infrastructure ­account — will be shovelled into the quarantined savings account for the disability scheme.

The latter drawdown, worth $3.7bn, will require new legislation and has drawn the ire of universit­ies, although this has died down.

“Tonight, we have chosen to close the funding gap for our NDIS once and for all,” Scott Morrison said in his speech last night.

“Our decision to increase the levy reflects the fact that all Australians have a role to play.”

The government will stump up $80 million over four years to fill the void in psychosocial support for people with serious mental illnesses left by the introduction of the NDIS. The money is for those serious cases who do not make it into the disability scheme and will only be made available if the states and territories kick in the same amount.

Although Labor claimed to fully fund the NDIS in its last budget, many of the measures it alloc­ated to the scheme were double-counted towards a non-existent future surplus. Some were axed by the Coalition when it came to ­government.

In any case, the funding gap in the commonwealth’s share of the scheme would have risen to more than $6bn in the years after full rollout in 2019-20, and quickly leapt to more than $7bn by the end of the new decade without intervention.

Julia Gillard, as prime minister, “enshrined the NDIS in our ­nation’s finances” but the hike in the Medicare Levy from 1.5 to 2 per cent covered less than half of the federal government’s ongoing commitment to the scheme. State and territory governments, on the other hand, had capped costs under agreements to deliver the NDIS and received a contribution from the previous levy rise.

The federal government bears all of the risk for cost overruns in the scheme — which will support 460,000 Australians with severe and profound disabilities — and the funding gap it faced stretched to $55bn over the decade, The Treasurer said last night.

Mr Morrison had previously tried to tie family tax benefit savings to the NDIS savings account but the move was painted as blackmail, the bills were split up and $3bn in savings for the scheme evaporated. Malcolm Turnbull once described the fact that a government might need to raise taxes to pay for the scheme as a “pene­trating glimpse of the obvious”.

The government will establish an NDIS Quality and Safeguards Commission, at a cost of $209m over four years. It will be respons­ible for handling complaints about service delivery, the use of restrict­ive practices and the overall safety and quality of services.

Despite sustained criticism in Western Australia, the Coalition has set aside $868m over three years to help form the WA version of the NDIS, which will run parallel and in line with other states.

Another $754m will also help extend aged care and specialist disability service arrangements, matters for which the commonwealth is now responsible after a 2011 COAG agreement.