The National Disability Insurance Scheme

Budget Resources

Dr Susan Pennings

The Budget contains a variety of measures which are intended to support the effectiveness and sustainability of the National Disability Insurance Scheme (NDIS). It also provides an annual growth target of 8% for the total costs of the NDIS by 1 July 2026.

Background

The NDIS provides individualised, fee-for-service funding for people who have permanent and significant disabilities. This funding provides supports to help NDIS participants in their daily lives, increase their independence, establish stronger connections with their community, and reach their goals. The National Disability Insurance Agency (NDIA) is responsible for implementing the NDIS.

Over recent years, there has been a focus on the safety, sufficiency, appropriateness, and sustainability of the supports provided to people living with disability. In April 2019, the government established a Royal Commission to investigate violence, abuse, neglect and exploitation of people with disability, which is due to report by September 2023. In October 2022, the Minister for the NDIS, Bill Shorten, launched a review into the NDIS, which is to make recommendations to ensure the sustainability of the scheme. The review is due to report no later than the end of October 2023.

In April 2023, the minister expressed the need for ‘systemic reform of the entire disability support eco-system’ and outlined 6 priority areas for reform:

  • improving the NDIA workforce
  • supporting longer-term planning
  • addressing spiralling expenses
  • improving the Supported Independent Living program
  • eliminating unethical practices by service providers
  • increasing community and mainstream supports for people with disabilities.

Targets for NDIS growth

The NDIS is currently the third largest program as measured by total general government sector expenses, with estimated expenditure of $41.9 billion in 2023–24 Budget paper no. 1: budget strategy and outlook: 2023–24, p. 202). Projections from the NDIS annual financial sustainability report 2021–22 suggest that the scheme could cost as much as $89.4 billion by 2031–32 (not including operating costs), which would be an estimated 2.55% of Australian gross domestic product (p. 5). States and territories contribute financially to the NDIS based on bilateral agreements with the Commonwealth.

The NDIS remains an uncapped, demand-driven program. As such, its future growth is partly dependent on factors outside the government’s control. The Budget’s statement of risks (statement 9) in Budget paper no. 1 (p. 321) notes that:

As with other demand-driven programs, the estimated costs for the NDIS are subject to adjustments to reflect observed changes in actual payments. As the Scheme is relatively new, there is greater potential for changes in forecasts of the number of participants, the funds allocated in participant support packages, the payments by participants from those funds for supports, and the resourcing required by the National Disability Insurance Agency to administer the Scheme.

The NDIS annual financial sustainability report 2021–22 notes that the rate of new entrants into the scheme is higher than previously projected, including in areas where it has been operating for several years. However, the report further notes that many of the new NDIS participants have a higher reported level of function compared with longer-standing participants. As these newer participants have lower average support needs, they also receive lower average plan budgets. This means that an increase in participant numbers does not necessarily lead to an increase in NDIS expenditure of the same magnitude (p. 10).

As stated in Budget paper no. 1 (p. 321), the government has committed to reducing the growth of the NDIS through a framework agreed between the Commonwealth and the states and territories:

The Government has committed to a NDIS Financial Sustainability Framework to ensure the Scheme is sustainable in the long term, with an annual growth target for Scheme costs of no more than 8 per cent by 1 July 2026. The realisation of the financial projections for the Scheme is dependent on the successful implementation of the framework.

The government has confirmed that the sustainability framework, on which achievement of the annual growth target will rely, has not yet been finalised. On 11 May 2023, the Senate voted to order the production of the NDIS Financial Sustainability Framework, to be tabled in the Senate. Senator Tim Ayres responded on behalf of the government, stating that:

In relation to the order for the production of documents… publishing National Cabinet documents would impact state and federal relations – and is not appropriate.

Furthermore it is impossible for us to table the document requested because it doesn’t yet exist. The agreement at National Cabinet was to agree to develop a Framework. [emphasis in the original]

Projected NDIS expenditure

The budget papers estimate that government expenditure on the NDIS will continue to grow but at a slower rate each year until 2026–27. Total expenditure from the Commonwealth and the states and territories on the NDIS is estimated at $36.7 billion in 2022–23 and is expected to be $41.9 billion in 2023–24, a growth rate of 14.4%. In the subsequent 3 years, the annual growth rates are projected to be 11.6%, 10.9% and 7.9% respectively (Budget paper no. 1, p. 202). With scheme maturity and an annual growth target of no more than 8% from 2026, the Budget projects that growth in NDIS costs will moderate by $622.8 million in 2026–27 and $59.0 billion over 7 years from 2027–28 to 2033–34 (Budget paper no. 2: budget measures: 2023–24, p. 198).

The majority of NDIA expenditure is on participant plan expenses, which is estimated to cost $35.1 billion in 2022–23 and projected to rise to $40.0 billion in 2023–24 and $45.3 billion in 2024–25 (Portfolio budget statements 2023–24: budget related paper no. 1.14: Social Services portfolio, p. 147).

Improving the effectiveness and sustainability of the NDIS

The 2023–24 Budget introduces a new measure called Improving the effectiveness and sustainability of the National Disability Insurance Scheme’. It provides $732.9 million over 4 years from 2023–24 and is intended to improve the administration of the scheme, trial new payment models, and prevent fraud (Budget paper no. 2, pp. 197–198).

Key aspects of this measure include:

  • $429.5 million over 4 years from 2023–24 to invest in the NDIA’s capability and systems, to improve processes and planning decisions. This would support the NDIA to develop more transparent and consistent policies and operational guidelines.
  • $73.4 million over 4 years from 2023–24 to better support participants to manage their own plans within budget. This measure is also related to compliance, as it specifies that it will involve ‘holding plan managers, support coordinators and providers to account’. While some NDIS participants manage their own plan funding, others employ plan managers from the non-profit or private sectors.
  • $63.8 million over 2 years from 2023–24 to take a lifetime approach and ensure that plans are transparent and flexible. The NDIA has also committed to allowing for longer plans for participants where appropriate.
  • $56.4 million over 4 years from 2023–24 to strengthen supported independent living decisions by improving consistency across decisions and updating guidelines for planners.
  • $24.6 million over 4 years from 2023–24 to trial blended payment models. This is intended to provide more efficient funding by increasing incentives for innovation for disability service providers. The NDIA also plans to implement preferred provider arrangements to leverage the buying power of the NDIS.
  • $48.3 million over 2 years from 2023–24 to invest in the NDIA’s ability to detect, respond to, and reduce fraud and non-compliant payments. This builds on previous measures such as the Fraud Fusion Taskforce, which was introduced in the October 2022–23 Budget (p. 9).

The funding in this measure is intended to support the NDIA to improve the administration of the scheme and reduce additional growth in NDIS expenses by $15.3 billion, moderating additional growth to $1.9 billion over 4 years from 2023–24 (Budget paper no. 2, p. 198).

In order to implement changes to the NDIS, the average staffing level for the NDIA will rise from 4,976 staff in 2022–23 to an estimated 5,698 staff in 2023–24, an increase of 14.5% (Budget paper no. 4: agency resourcing: 2023–24, pp. 153; 163).

Other disability-related measures

The Budget also provides funding for a range of other measures to support the effectiveness of the NDIS.

The Budget provides additional funding of $142.6 million for the NDIS Quality and Safeguards Commission over 2 years from 2023–24. This funding has been allocated to support the commission to assist participants; minimise the risk of violence, abuse, neglect and exploitation; and improve market quality for disability services (Budget paper no. 2, p. 200).

There is also $31.4 million over 4 years from 2023–24 to meet the remaining costs of establishing the National Disability Data Asset and its underlying infrastructure. The National Disability Data Asset contains linked and de-identified Commonwealth, state and territory data on Australians with disability. It is intended to inform research and disability policy and help to improve service delivery (Budget paper no. 2, p. 202).

The budget measure ‘Support for people with autism’ provides $27.0 million over 4 years from 2023–24 for additional early intervention pilot programs for infants with signs of autism and to progress the development of National Autism Strategy (Budget paper no. 2, p. 204). There are a high number of new NDIS participants with a primary disability of autism, reflecting increased prevalence rates of autism both in Australia and internationally (p. 158). The minister has noted that the pilot programs will consider whether early intervention for children with early behavioural signs of autism could reduce the support they need later in life.

The Budget also provides $487.0 million to extend the Disability Support for Older Australians program, which supports older people with disability who had received specialist disability services but are not eligible for the NDIS (Budget paper no. 1, p. 17).

Stakeholder views

There has been a mixed response to the budget measures from political and sector stakeholders. While stakeholders support the focus on the long-term sustainability of the NDIS, there are also concerns about possible future cuts to necessary disability services.

The provider peak body National Disability Services welcomed the government’s commitment to improving the NDIS but said that reforms to the scheme should be made ‘with providers to make sure that the changes are practical and can be implemented without reducing quality, safety and putting participants at risk’.

People with Disability Australia stated:

We welcome the Government’s commitment to work with the disability community in implementing the new NDIS initiatives funded in tonight’s budget … Following recent concerns, we’re buoyed that the 8% growth target for the NDIS is a target and not a cap, and that the NDIS will remain demand driven … However, it is important that the community is given an ongoing commitment that their choice and control over access to essential supports is protected.

The Leader of the Opposition, Peter Dutton, stated ‘we support sustainable funding in the NDIS. This budget shows the government reducing NDIS spending growth’ but called on the government to outline how this will be achieved.

Senator Jordon Steele-John, the Australian Greens spokesperson for Disability Rights and Services, commented:

The decision to cut $74.3 Billion from the NDIS is Labor stabbing the disability community in the back… The NDIS Review has had input from many in the disabled community; people were hopeful that the scheme has a clear trajectory for change. Instead, it is disappointing that big decisions that will impact the future of the scheme are being made without considering the inputs into the review.

 

All online articles accessed May 2023

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