NDIS heads admit ‘real risk’, urge design changes

There are ‘real risks’ to the financial sustainability of the $22bn NDIS, according to the program’s senior bosses.

There are “real risks” to the financial sustainability of the $22 billion National Disability Insur­ance Scheme and its legislation should be changed to avert a cost blowout, according to the program­’s senior bosses, who have never before publicly conceded its precarious design.

The stark admissions are contained in the NDIS agency’s submission to an independent review of the scheme’s legislation, which was handed to the federal government in December but publicly released only this week after a Freedom of Information request by The Australian.

The Ernst & Young review contains a litany of concerns from the agency about the initial design of the NDIS, specifically about the blurred line between disability and health, which it says will blow out the projections for the number of participants in the scheme.

“The Productivity Commission ... based the current funding model of the scheme on 411,250 people having permanent disability,” it says.

“This figure did not accom­modate for people with a con­stellation of impairments caused by chronic health conditions, such as diabetes and obesity.

“A lack of clarity around the application of the disability requiremen­t poses a real risk to the financial sustainability of the scheme.”

Indigenous Australians make up the vast majority of people with a disability caused by health concerns such as diabetes and, more broadly, experience disabil­ity at twice the rate of the general population.

The review, which the Council of Australian Governments will consider by July, recommends amending the NDIS Act in accordanc­e with a suggestion from the agency so that the disability requirements section has a clearer demarcation of responsi­bilities between the NDIS and other service systems, such as health and education.

The review also exposed attemp­ts by other stakeholders to broaden the scope of the NDIS by rejecting submissions to “dilute” the requirement for the NDIS chief executive to focus on “value for money” when deciding how to support people. “In our view, diluting­ the value-for-money provision­s of the NDIS Act would not only threaten the financial sustainability of the NDIS but also run counter to the intended design of the scheme,” the review says.

The NDIS agency requested more amendments to the legislation because their “emerging experience during the trial period­” revealed a gap in the consistency of decision-making re­gard­ing what constitutes value for money.

The admissions by the agency bosses are significant because the federal government, the Labor oppos­ition and the agency itself have never publicly conceded that there are risks in the design of the scheme, acknowledging only that the small trials are being deliver­ed “on time and on ­budget”.

The federal government used some of the advice from the Ernst & Young report to inform its sudden bid for more control of the NDIS from the states and territor­ies at last month’s Disability Reform­ Council meeting.

“So what we’re trying to do is have a scheme where the commonwealth is able to respond more quickly with any of the issues­ that arise,” Social Services Minister Christian Porter told ABC radio after the meeting.

“Keeping in mind of course that when the scheme goes to full rollout … 100 per cent of the risk is borne by the commonwealth of any cost overruns or anything of that nature. So we need to have a scheme that’s responsive, in the best interests of clients.”