Labor states hold NDIS funding to ransom

Malcolm Turnbull is on a collision course with four state Labor governments over funding of the NDIS.

Malcolm Turnbull in Adelaide yesterday. Picture: Kelly Barnes

Malcolm Turnbull is on a collision course with four state Labor governments over funding of the ­National Disability Insurance Scheme as premiers warn that services such as mental health, justice and transport for disabled people could be cut if they are forced to pay more.

The governments of Victoria, Queensland, South Australia and the ACT have declared the NDIS will be unsustainable if they are made to increase funding ­despite having an agreement with the commonwealth that caps ­increases at 3.5 per cent in perpetuity after the full scheme launch and cuts their risk to zero.

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Social Services Minister Christian Porter rebuked the states, telling The Australian he would not accept “cost-shifting attempts or excuses by any jurisdiction ­designed to renege on the longstanding promise of states providing appropriate services outside the NDIS”.

Tension between governments represents the greatest threat to the financial stability of the scheme as the federal government resists state pressure to ­increase its scope and moves to keep it within the initial design.

The battle comes after The Australian revealed the National Disability Insurance Agency, which employs almost 1900 full-time-equivalent staff directly, has launched a crackdown on annual support package costs for the 75,000 current participants.

The average value of annual funding plans for NDIS clients was about $50,000 in the last quarter. More than 10 per cent have a plan with a value in excess of $100,000 each year. The states, in naming their ­demands, have raised fears they will hold the scheme to ransom in order to escape their own budget blowouts.

South Australia has warned it does not have the capacity to ­increase its contribution to the NDIS beyond its current commitment of $732 million (indexed).

Funding for the NDIS was a centrepiece of last week’s federal budget with Scott Morrison announcing the Medicare Levy would rise 0.5 per cent from 2019 to provide $8.2 billion over the ­forward estimates to fully fund the scheme.

The move has drawn battlelines for an intense political firefight with Labor, which wants the Medicare Levy rise restricted to workers earning above $87,000 and the retention of the temporary deficit levy on incomes above $180,000, which is due to end from July.

In Adelaide yesterday, the Prime Minister said Labor never fully funded the scheme, and spruiked the levy plan to pay for it.

“The (NDIS) faces a $55bn shortfall in future years,” Mr Turnbull said. “If nothing is done, the system will fail the people who need it the most.”

Joint submissions by the states to a Productivity Commission ­inquiry into NDIS costs — including a second, separate submission by South Australia — make their new demands clear.

“An unbudgeted increase in disability funding (e.g. through cost shift to the states, or an increase in the rate of indexation of the state contribution), without a corresponding increase in revenue, could mean a reduction in quality or accessibility for those who access those services,” the joint submission says.

“Given the above, the ­implications of changing cost and risk sharing arrangements to ­increase the burden on states is likely to have negative implications for the NDIS’s sustainability.”

Cost-shifting has been raised as a concern by a litany of expert groups — including people with disabilities, service providers, the legal profession, mental health groups, advocates and academics — but principally in relation to state governments withdrawing from the provision of services for which they have historically been responsible.

All have warned that state governments must not be allowed to give up their ordinary obligations to the NDIS.

Mr Porter yesterday demanded the states stick with their agreements.

“While the NDIS is a significant step forward for many people with disability, it is designed to complement rather than completely replace mainstream service systems that provide support to the millions of Australians living with disability who will not be ­eligible for the NDIS,” he said.

“All state governments, through the Disability Reform Council, reaffirmed their ongoing commitment to the National Disability Strategy in September 2016. It is the commonwealth’s expectation that all governments meet this commitment through the provision of appropriate services outside the NDIS in line with the agreed set of applied principles.”

The South Australian submission to the inquiry sets out a blueprint for state programs it feels it should no longer have to fund, to be soaked up by the NDIS. It said the state did “not have the capacity to increase its level of contribution to the NDIS beyond the $732m (indexed) that has already been agreed”.

“As policies and eligibility have been clarified over the trial/transition period, there are a number of emerging issues which are or are expected to result in costs for the state in areas which were originally assumed to be part of the scheme,” it says.

“These include, but are not limited to, areas around transport, complex case management as well as in the key interfaces with the child protection, health, mental health and justice systems. South Australia is keen to ensure that all appropriate costs are met by the NDIS to avoid any potential of states effectively paying twice for services.”