NDIS funding is budget priority

High on the list of budget priorities must be regaining control of runaway spending on the National Disability Insurance Scheme. But on this issue Jim Chalmers’ grasp of reality appears tenuous. The government’s goal is to halve annual growth in the NDIS – not overall spending, just increases – to 8 per cent a year from 2027. In a scheme that now costs $42bn a year and could consume $125bn by 2034 this is less an aspiration than a necessity. But the best the federal Treasurer mentions is “movement” on NDIS costs in the budget. Perhaps it is meant to come from the plan Anthony Albanese sold to the states in December. In return for a complex funding formula, the intent is for the states to provide “foundational supports” outside the scheme, in-home care and targeted assistance for people with specific needs, notably for the fast-growing number of children diagnosed with autism or developmental delay. They now account for three-quarters of NDIS clients under 18 and make up 20 per cent of the scheme’s total costs. Social Services Minister Amanda Rishworth is leading work by officials and ministers from the states and the federal government, and tells The Weekend Australian’s Sarah Ison a “phased rollout” will begin in July next year – which means there will be precious little time for cost growth to slow.

States surely have been negligent in passing existing responsibilities to the federal government under cover of the NDIS but it is hard to imagine a better way than this to start arguments over cost-shifting between the states and the federal government. This may be why in January Treasury officials blocked a Freedom of Information request from The Australian for economic modelling on how NDIS savings would be made. It is even harder to grasp how “foundational supports” will halve the spending growth already baked into the NDIS model, even without the inevitable costs of inefficiency and dishonesty among providers. What the National Disability Insurance Agency calls “plan inflation” led to 19 per cent of participants having their support reassessed in the second half of last year. More than half of them had an increase in their budgets for support, with 17 per cent nearly doubling. And once they have a support plan, people stay on the NDIS. The Australian Government Actuary reports 25 per cent fewer people left in 2022-23 than in the previous year, 40 per cent less than anticipated, with significantly fewer exits than expected in all major categories.

To suggest that costs can be quickly contained by new state support systems established by administrative fiat is unlikely. Transferring people from the NDIS to another service, which inevitably would be viewed as second-rate, would be politically difficult. Across time, a two-tier scheme that provides services that specifically target the varying needs of people as they join schemes may well reduce overall expenditure. But it is not going to occur quickly and it is not going to start in the next couple of years. What is being proposed is a quick fix to take the long-term policy problem of unsustainable NDIS spending off the short-term election agenda.