Case for NDIS cost reform grows

Given the difficulty in funding the demands of the national health system, it is impossible to believe that when the National Disability Insurance Scheme was introduced it was intended to cost an equal amount. Cost blowouts clearly demonstrate that the federal government has lost control of the NDIS budget. Estimates for additional NDIS funding to be included in the mid-year economic and fiscal outlook have grown by a further $26bn over the forward estimates. This is on top of the additional $13bn included for the NDIS in the budget in May. In total, the NDIS spend soon will be equal to that of the health system.

Clearly, urgent surgery is required. The NDIS was conceived as a compassionate response to the difficulties faced by those living with lifetime disability. But, as we have editorialised previously, the system is widely considered to be overly bureaucratic. Some who need support cannot get it. Others who enter the system with specific childhood needs are continuing on with funding well into adulthood. State governments that used to cover some of the costs now picked up by the NDIS have withdrawn their contribution. As a result, from a 50-50 funding split when the scheme was introduced, the federal government share is on track to be more than 60 per cent by 2025. The cost of the NDIS for the economy is greater than the raw numbers suggest. The creation of high-paid, government-funded work for carers in the NDIS is creating shortages in other areas of the economy, making it more difficult for employers to find workers. This feeds into higher costs for goods and services that ultimately must be passed on to consumers.

The whole NDIS system has become illustrative of the waste and inefficiency endemic to state planning. A lack of discipline in determining qualification for government support coupled with the high cost of service delivery must be addressed. It is time for root-and-branch reform to weed out overservicing and put the cost of the service on to a sustainable footing. State governments must restore the funding they have withdrawn. And better oversight must be introduced to ensure government help is going where it is needed most. Streamlining the NDIS inevitably will result in difficult choices and community disappointments. But left unchecked, the NDIS will cause substantial damage not only to the national balance sheet but also to other areas of the economy and other government services that must compete for funds.