Gillard government NDIS deals put scheme at risk, Productivity Commission says

An NDIS rollout “rush” under the former Gillard government has jeopardised its financial stability, a review warns.

NDIS deals struck by the Gillard government have put the scheme’s financial stability at risk, the Productivity Commission says. Picture: Kelly Barnes

The speed at which the $22 billion National Disability Insurance Scheme has had to roll out, owing to agreements struck under the former Gillard government, have put the scheme’s “success and financial stability at risk”, the Productivity Commission says.

In a draft paper on the scheme’s costs, the commission says this rush has “resulted in the NDIA focusing too much on meeting participant intake estimates and not enough on planning processes, supporting infrastructure and market development”.

The draft paper says one option to address this is to slow down the rollout because the schedule is “compromising the integrity of the planning process, and the quality of participant plans”.

The NDIA is the independent body charged with implementing the disability scheme.

In a major blow to a lucrative ride offered to all governments under the scheme, the commission says “in-kind” funding arrangements must be phased out.

These arrangements have allowed governments, especially the states, to continue providing some services but being able to charge the NDIS what they think they are worth, even if they are vastly above market rates, creating cashflow pressures for the central agency which runs the scheme.

“The National Disability Insurance Agency has been given an extremely difficult task — the rollout schedule is highly ambitious given the magnitude of the reform,” the commission’s position paper says.

“To reach the estimated 475,000 participants at full scheme by 2019-20, the NDIA will need to approve hundreds of plans a day. In the March 2017 quarter, the NDIA approved about 14,000 plans, or roughly 160 plans a day.

“In 2018-19 (the final year of transition), the NDIA’s modelling indicates that about 500 plans a day will need to be approved, while reviewing hundreds more.”

The paper says errors have been made on eligibility and noted that 40 per cent of children in the scheme had no developmental deficits, compared with what is normal for their age.

It also suggests abolishing the fixed “escalation” of state funding contributions to the scheme and setting a fairer formula which freezes the proportion of funding between the federal and state jurisdictions in line with rising scheme costs.

As it currently stands, the costs borne by the commonwealth grow at a faster rate than those worn by the states.

Submissions on the draft position paper are open until July 12.