National Reform Summit: NDIS too big, says Martin Parkinson

The $22 billion NDIS is too big to fund by seeking savings elsewhere in the budget, says Martin Parkinson.

Former Treasury secretary Martin Parkinson says the NDIS is an issue of ‘fiscal structure’. Picture: Jonathon Searle

The $22 billion National Disability Insurance Scheme is not paid for and is too big to fund by seeking savings elsewhere in the budget, according to former Treasury ­secretary Martin Parkinson in one of the most damning assessments of the scheme’s finances.

Mr Parkinson told The Australian the NDIS, designed to fund ­individual packages of support for people with the most profound disabilities, was an issue of “fiscal structure” for the federal ­government.

“This is ... about expanding the role of government in this country and we should be raising ­additional revenue to pay for it,” he said.

“It is unrealistic to say we will pay for it by cutting expenditure elsewhere.”

His comments at the National Reform Summit in Sydney yesterday come at a crucial time for the federal government which is split internally about how to pay for the scheme and whether its cost can be constrained.

This newspaper has revealed cost pressures on the NDIS that range from the rates of autism ­diagnoses, inaccurate accounting of the cost of indigenous participation and the cost of ageing, which was poorly factored into the original funding envelope.

Last week, Assistant Social Services Minister Mitch Fifield told Sky News there could be delays to the scheme despite his public and ongoing commitment to deliver it “on time and in full”.

“There could be unforeseen ­issues beyond the commonwealth’s control which could affect the schedule,” he said.

“I think that’s just a matter of logic.”

The opposition, which has long claimed to have “delivered” the NDIS, won’t concede its funding is compromised or inadequate.

“When Labor left office, we left the National Disability Insurance Scheme fully funded partly as a result of an increase in the Medicare levy, which people are now paying, but also as a result of a range of other decisions that we made,” ­opposition disability reform spokeswoman Jenny Macklin told ABC Radio yesterday.

Former prime minister Julia Gillard persuaded parliament that a half a percentage point rise in the Medicare levy would provide a quarantined source of revenue for the NDIS but 25 per cent of those funds would go to states and territories to help cover their share of the cost.

Of the full cost, assuming no overruns, the states will pay $10 billion and the commonwealth will fund $12bn although it would have spent $3bn regardless of whether the NDIS existed.

Of the net additional cost to the commonwealth — $9bn — the Medicare levy increase only funds about 40 per cent, leaving a $5bn gap which needs to come from elsewhere in the budget, or as yet unidentified revenue.

The federal government is due this month to finish negotiations with the states about the full rollout, which will be completed in 2019 and see the numbers rise from 30,000 next year to 460,000 participants in 2019.

The Productivity Commission envisioned the NDIS would eventually provide a boost to the GDP as people who require support to live get the help they need and then enter the workforce. It estimated that would translate to 35,000 full-time jobs, generating an economic impact of $9.6bn.

People with Disabilities Australia president Craig Wallace said if the levy was not raised “the NDIS would have sunk without a trace. This scheme embodies all of the ideals of reform by opening up the disability sector to competition and market-based forces and unlocking a potential workforce”.