NDIS needs to be fraud-proofed

Almost 12 years after the launch of the National Disability Insurance Scheme in July 2013, its public administration and guardrails against fraud and inefficiency need a thorough overhaul, regardless of Saturday’s election result. The failures and misdeeds of an NDIS provider company, Cocoon SDA Care, co-founded by a former bankrupt, Zaffar Khan, have potentially harmed some of the scheme’s most vulnerable clients as well as company staff and the public purse.

National crime correspondent David Murray reports that Cocoon SDA Care, which operates in all states, left a South Australian man with disabilities confined to his home after charging the taxpayer-funded scheme $50,000 for care services that were never provided, according to whistleblowers. Cocoon also was claiming payments from the NDIS for providing one-on-one care for the man when he had a housemate also under care, and for times when he was in the care of another provider.

The company then stalled on repaying the money. It continued operating while failing to keep up with superannuation payments to staff since at least last year. Workers also complain that they are owed wages and entitlements.

Amid allegations of misuse of taxpayer funding and a taskforce of several agencies, launched 2½ years ago to investigate fraudulent abuse of the NDIS in general, the business has been rushing to get clients to switch over to new companies with ties to Mr Khan and his associates, insiders have told The Australian.

Several points in this costly mess need to be addressed. First, how was a company co-founded by Mr Khan, who previously went bankrupt after the failure of his Ideal Cabs business that he says trained the unemployed to drive taxis, engaged to provide NDIS services? Second, why were several red flags surrounding him ignored?

Murray reports authorities previously forced Mr Khan’s taxi company to close after repeated warnings over shonky business practices. In 2007, Western Australia’s consumer watchdog warned the public about a “get rich quick” property scheme Mr Khan was promoting. And in 2015, a Toowoomba couple, two doctors, took Mr Khan to Queensland’s Supreme Court over a Dial a Home Doctor service he co-founded with fellow entrepreneur Muhammad Latif. The doctors said they invested more than $1.1m in the service and claimed Mr Khan siphoned off funds and told them “money gone, money mine”. The case was settled out of court confidentially. Mr Latif also co-founded Cocoon SDA Care.

A key questions that should be asked is: in engaging the company as a service provider, what due diligence did the NDIS undertake, and did it act on it? Cracking down on fraud was a major part of the Albanese government’s strategy to limit the growth in costs of the NDIS to 8 per cent a year. In March, the budget papers showed the NDIS would cost $48.5bn this financial year. It is forecast to cost $52.3bn in 2025-26, rising to $63.4bn by 2028-29. That trajectory puts it third in the list of the costliest programs funded by federal taxpayers, behind payments to the states and the Age Pension. Across the four-year forward estimates, it is projected to cost $50bn more than aged care.

Established with bipartisan support to help some of our most vulnerable citizens, the NDIS will prove sustainable only if costs are contained. Doing so must be a priority of the new parliament. Eligibility criteria must be pared back, ensuring states take up responsibility for providing services to children with mild autism. The cost of middlemen such as plan managers and support co-ordinators should be cut. Administrative reform is vital, including checking the track records of potential service provider companies.