Care economy matters too much to be unsustainable

In serving the needs of many of the nation’s most vulnerable citizens whose daily lives include a battle against severe disabilities, the National Disability Insurance Scheme must be put on a sustainable footing. The scheme, which currently costs about $40bn a year, is too important to many Australians’ quality of life to be allowed to fail. The cost of the scheme is on track to blow out to more than $100bn a year by 2034-35, unless reined in. And that task will be made even more difficult, Natasha Bita reports, if the Albanese government follows the precedent it has set in giving hefty taxpayer-funded pay rises for aged-care and childcare workers. About 270,000 NDIS support workers, represented by four powerful trade unions – the Australian Workers Union, the United Workers Union, the Health Services Union and the Australian Services Union – are preparing a case to put to the Fair Work Commission seeking substantial pay rises for NDIS staff over and above inflation.

The prospect of yet another taxpayer-funded pay bonanza sparked concern among serious economists about the structural deficit now facing the nation. Judo Bank chief economist Warren Hogan said government spending was rising to its highest levels: “Are we going down the path of Europe or other countries where we just run deficits and government grows?”

The 15 per cent rise for 200,000 childcare workers will pump $3.6bn into the economy. In March, the Fair Work Commission awarded 350,000 aged care worker increases of up to 13.5 per cent, on top of 15 per cent last year. This year’s rise will cost $3.3bn across four years, on top of the rise in July last year that will cost about $11.3bn over the forward estimates.

After those precedents, it is no surprise that disability carers, some of whom earn $33.41 an hour, are also seeking rises. When Labor promised the pay hike for aged-care workers during the 2022 election campaign, we predicted that carers’ unions in other sectors would make similar claims. Staff in the care economy work hard, provide important services and deserve decent pay. But taxpayers are not a bottomless pit.

The government is seeking to rein in NDIS costs by cracking down on rorts and moving to stop participants being able to endlessly top up their plans. In view of the need for fiscal restraint to contain inflation and the federal deficit, Labor’s goal of slashing the NDIS’s annual growth to 8 per cent is worthwhile. But those who rely on the scheme, and their carers, have reason to be uneasy in view of the states’ reluctance to embrace reform. If the NDIS is to fulfil its purpose to help those with severe disabilities, it is essential that children with less severe autism and developmental delay be helped outside the scheme in state settings such as schools and childcare.

The challenge of ensuring the scheme remains affordable has become harder, Sarah Ison revealed this week, with disability service providers demanding a $2bn-a-year top-up to fix a major mathematical error in how prices are set by the agency running the NDIS. The error is leading to thousands of providers being underpaid by up to 10 per cent and becoming financially unviable.

Given the growth of the care sector amid an ageing population, the fiscal demands on taxpayers underline the importance of productivity growth in industries to generate the revenue to fund aged care and childcare (with reasonable input of user-pays contributions) and a better-managed NDIS. A combination of good-heartedness backed by economic rationality is needed.