Hopes and best wishes won’t fix the NDIS, says Senator Linda Reynolds
After a year in government, Labor is still in deep denial on what ails the National Disability Insurance Scheme. The longer they fail to reform the scheme to ensure it is controllable and therefore sustainable, the harder and more expensive it will become to successfully reform. This will only cause further uncertainty and distress for the 600,000 NDIS participants with severe and permanent disabilities and their families.
Bill Shorten’s “State of the Union” National Press Club speech last month failed to address the causes of the scheme’s exponential and uncontrollable cost growth. Instead, his speech was filled with his customary rhetoric, cliches and an ill-defined six-point plan.
This was the ideal opportunity for Bill Shorten to provide a road map for ensuring the long-term sustainability of the NDIS, now a $40 billion annual scheme. To provide some context, it is now more expensive than Medicare and Defence. On the current trajectory, it’s estimated that taxpayers will be paying $97 billion annually by 2032-33. Labor’s October 2022 budget forecasted an annual growth rate of 13.8 per cent and this week’s budget optimistically forecasts a revised annual growth rate of 10.4 per cent.
The government’s second missed opportunity was last week’s announcement following National Cabinet of their 10-point plan under the NDIS Financial Sustainability Framework. While discussion of sustainability in National Cabinet is welcome, few of these initiatives are new and none will provide the federal government with the levers to curb growth to their new aspirational target of 8 per cent by 2026. If 10.4 per cent is optimistic, then 8 per cent is truly heroic, particularly without a plan to deliver it.
After confidently declaring in April last year that he didn’t need any additional funding for the NDIS, Bill Shorten’s plans for a multi-year “reboot” means that Australian taxpayers will pay at least $732.9 billion over the next four years.
The Labor Government knows, as well as I do, that there are only two significant reforms that will save the NDIS.
Rather than providing solutions to address the Scheme’s serious and systemic problems, Bill Shorten has made it very clear that he will continue to deny it’s well-documented failures, largely caused by their 2013 NDIS legislation.
The first essential reform is for the 2013 NDIS legislation to be amended to provide the federal government with the ability to control both drivers of Scheme costs – participant numbers and cost per participant.
The federal government does this with all other demand driven schemes, including Medicare and the Pharmaceutical Benefits Scheme. The key barrier to this reform is Labor’s 2013 legislation, which provides all States and Territories with the power to veto any amendments before it is presented to federal parliament.
The second essential reform is for all State and Territory intergovernmental agreements (IGAs) to be renegotiated to ensure all Australian governments have an equal liability for all cost overruns.
The IGAs were based on early flawed actuarial assessments, including the assumption that scheme costs would not increase by any more than 4 per cent per annum. On that basis, the commonwealth agreed to IGAs that were based on a national 50/50 split between commonwealth and States and Territories, with States and Territories paying a flat 4 per cent per annum increase with the commonwealth responsible for the balance of the increase. That has resulted in the commonwealth currently paying 70 per cent of NDIS costs.
All renegotiated IGAs must also address State and Territory responsibilities for the provision of disability services and supports which they signed up to last year in the Australian Disability Strategy. In particular, the requirement for all States and Territories to provide disability services to the four million Australians who are not eligible for the NDIS.
The challenges confronting the NDIS will not fix themselves, despite Bill Shorten’s hopes and best wishes. To make the necessary changes, he must move beyond his political posturing and address the root causes of unsustainable financial growth.
The NDIS is a globally unique Scheme, one that all Australians can be proud of. The fact that we want all Australians, in this case those with permanent and significant disabilities, to have an equality of opportunity to pursue their life aspirations.
We don’t need to change the values and principles of the NDIS, we must reform the cost levers to ensure this incredible Scheme endures for generations to come. The next step must be for Bill Shorten to stop acting as if he is still the shadow minister and step up to embrace the bipartisanship that Peter Dutton has offered, and provide solutions the Federal, State and Territory governments can support.
Senator Linda Reynolds served as Minister for the National Disability Insurance Scheme, 2021-22.
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