Federal budget 2023: Labor spruiks $15bn in NDIS ‘administration’ savings

Labor says it will achieve a massive $15.3bn in savings to the ­NDIS through less frequent plan reviews, more staff and better value for money from services.

National Disability Insurance Scheme Minister Bill Shorten during question time in parliament on Thursday. Picture: NCA NewsWire / Martin Ollman

Labor says it will achieve a massive $15.3bn in savings to the ­National Disability Insurance Scheme through less frequent plan reviews, more staff and better value for money from services and equipment, but the government will not tighten access to the ­welfare scheme.

After announcing the annual growth of the NDIS would be nearly halved by 2026, Labor on Tuesday baked the 8 per cent-per-year growth target into its economic projections and revealed it expected to achieve $74.3bn in NDIS savings over the decade.

The NDIS will still cost $35bn this financial year and grow to $56bn in 2026-27, with the budget showing Treasury warned costs would blow out by a further $17.2bn over the next four years without “action”.

Former NDIA board member Martin Laverty, chief executive of disability services firm Aruma, said the plan to bolster the capability of the NDIA and overhaul plan reviews was “an entirely necessary first step” but stressed the eligibility of those on the scheme needed to be desperately reconsidered to rein in costs.

He argued the NDIS review, due to report in October, needed to address “who the NDIS is for and what it pays for in order to improve participant experience”.

People Economics director Hassan Noura, a former NDIS strategist, also said he was not confident the savings could be achieved without the government making changes to stop so many people entering the scheme and reducing the cost of each plan.

Jim Chalmers said on Thursday the government had identified “ways that we can moderate the growth in costs without jeopardising the care that people with a disability need and deserve”, stressing those on the NDIS were Labor’s “complete priority”.

Documents released two days after the budget show the ­government believes it can claw back the largest savings from ­implementing a $73m reform aimed at ensuring participants better manage their plans within their budgets. This is expected to save more $7bn over the next four years.

This would involve greater oversight of plans, with the agency intervening if a plan was being run down faster than expected and investigating the reasons, including whether the participant was being overcharged.

A further $3.1bn would be saved by investing almost $420m in the NDIA’s capability and systems, which would include more staff and better computer systems.

NDIS Minister Bill Shorten said he was confident the cost of the scheme would be moderated in large part by improving the agency’s capability and how participants’ plans were managed.

“In this budget we have invested in the agency so they can improve the quality of the planning process, which will ripple through the smooth running of the whole scheme,” he told The Australian.

Frequency of plan reviews will also be scaled back; more than 70 per cent of participants have plans reviewed every 6-12 months. The Australian understands the government is considering extending this to three to five years, which is expected to save billions in administrative costs.

A $29m investment to support the quality and effectiveness of services to participants – aimed at preventing price gouging – is expected to save the NDIA $2.5bn over the next five years.

The consumer watchdog has confirmed it had received a “steady increase” in complaints from participants, with mark-ups on “NDIS-approved” equipment pushing prices up more than 10 times what the products are worth on the open market.

For example, a shower stool selling for $150 online costs almost 1300 per cent more once it is NDIS-approved. Another shower chair found online retailed at $170, while an almost identical chair with NDIS approval went for $1150.

The government also is hoping to bank $700m from strengthening independent living arrangements, with independent living packages representing the most expensive plans on the scheme – averaging about $400,000 each.

Dr Laverty told The Australian the steps taken in the budget were the “first steps to reining in costs” and “the extra capability for the agency will help it better scrutinise plans and hopefully bring an end to outsourced plan management”.

But he argued the NDIS review reporting in October “must address who the NDIS is for and what it pays for in order to improve participant experience”.

“We have to tackle the reality that the Productivity Commission designed the NDIS for 410,000 Australians compared to the almost 600,000 on the scheme today,” he said.

Mr Noura expressed scepticism about Labor’s plan, warning the “idea that helping people stay within budget will save $7.2bn is a very long bow to draw”.

“The scheme is centred on choice and control. Participants can spend their money on whatever they want,” he said. “There is no recent evidence that gives me confidence that these savings are achievable.”

Mr Noura said the government’s newly announced expert advisory committee – which would look at the best evidence-based supports for participants – could be effective but only if it was given “real teeth”.

“If they were empowered to say, for example, the evidence finds speech pathology more than once a week is no more beneficial than once a month and therefore we will cap it … that would create a huge difference,” he said.

“Without real power, real teeth or real cost control it’s hard to imagine just advising or informing participants could possibly lead to sufficient behavioural change that would save $7.2bn.”