Susan Pennings
Over the past few years, participants, stakeholders,
politicians and commentators have called for reform of the National Disability
Insurance Scheme (NDIS) and for constraint on spending on the scheme. The 2024–25
budget papers state that legislative reforms being undertaken by the government
are expected to largely offset the $15.9 billion increase in spending over 5 years
projected by the NDIS Actuary (Budget
strategy and outlook: budget paper no. 1: 2024–25, p. 97). The government
expects its reforms will moderate this additional growth in NDIS spending by
$14.4 billion over 4 years from 2024–25. Stakeholders have raised concerns
about the limited detail currently available about these reforms, and about how
the reductions in spending growth would be achieved.
This article provides context for the NDIS legislative
reforms and Budget measures by describing the government’s recent policy
measures to address Scheme sustainability and the projections of future NDIS
spending without further reform. The article considers how the legislation and
Budget measures may be intended to address recommendations from the NDIS Review
and discusses commentary from political and sector stakeholders as to how the
projected savings would be achieved.
Background
While there is widespread support for the original intent of
the NDIS, there have been a variety of criticisms of how the scheme has been
designed and is functioning in practice. Politicians, stakeholders, and
commentators have argued the NDIS is financially
unsustainable;
that a significant
proportion of funds are lost to fraud or overcharging
by disability providers; and that the numbers
of NDIS participants and levels of government spending continue to rise
faster than predicted. In 2023, the International Monetary Fund recommended
that the government ‘improve expenditure outcomes and contain structural
spending growth in health, aged care, and the NDIS’.
A number of recent policy measures are intended to address
these concerns:
- The Fraud
Fusion Taskforce was established as a
multi-agency partnership to more effectively detect, resolve and prevent fraud.
- New regulatory
measures were introduced to prevent suppliers and providers from
unreasonably charging NDIS participants more for a product or service than
non-NDIS participants.
- National Cabinet has committed to develop additional ‘Foundational
Supports’, which are services outside the NDIS for people with disability. These
would be delivered through existing government service settings where
appropriate (such as childcare and schools), and jointly commissioned by the
Commonwealth, states, and territories.
- The government
has committed to an annual growth target of 8% for the total costs of the
NDIS by 1 July 2026. The details of how this 8% growth target would be
achieved are contained in the NDIS Financial Sustainability Framework. This framework
has not been made publicly available due to a public
interest immunity claim by the government.
In December 2023, the final
report of the NDIS Review was
published. The NDIS Review made 26 recommendations with 139 supporting
actions intended to make the NDIS more responsive, supportive, and sustainable.
The government has stated that the highest
priority recommendations of the NDIS Review are guiding their legislative
and other reforms to the NDIS.
Projections of future NDIS expenses
without further reforms
The 2024–25 Budget estimates that the total cost of the
NDIS, including both Commonwealth and state contributions, will be $44.3
billion in the 2023–24 financial year (Budget
paper no. 1, p. 211). This is higher than the $41.9 billion estimate
for the same period in
the 2023–24 Budget.
The budget papers report projections of how NDIS expenses would
increase without further reforms. Budget
paper no. 1 states that:
… payments related to the NDIS were estimated to increase by
$1.3 billion in 2023–24 and $15.9 billion over 5 years from 2023–24 to
2027–28 based on revised projections from the NDIS Actuary showing increased
expenditure on supports for NDIS participants, as well as other accounting
adjustments. (p. 97)
These projections are based on data from December 2023
(Budget
measures: budget paper no. 2: 2024–25, p. 40). This means it is based
on more recent data than used in the Annual
financial sustainability report 2022–23 by the National Disability
Insurance Agency Board (and reviewed by the Australian Government Actuary). Further
details about the budget projections by the NDIS Actuary are not publicly
available.
2024 reforms
The government has announced a
process of reforms to the NDIS which is intended to moderate cost growth
and return the working of the scheme to its original intent. These reforms include
legislation amending the National
Disability Insurance Scheme Act 2013 (NDIS Act) and measures in
the 2024–25 Budget.
Legislation
The National
Disability Insurance Scheme amendment (getting the NDIS back on track no. 1)
Bill 2024 was introduced to the House of Representatives on 27 March 2024. The
Explanatory
Memorandum states that the amendments in this Bill give effect to
Recommendation 3 and interconnected elements in Recommendations 5, 6, and 7
from the final report of the NDIS Review. The amendments also support the
partial implementation of recommendation 17. These
are:
Recommendation 3: Provide a fairer and more consistent
participant pathway (p. 6)
Recommendation 5: Provide better support for people with
disability to make decisions about their lives (p. 7)
Recommendation 6: Create a continuum of support for children
under the age of 9 and their families (p. 8)
Recommendation 7: Introduce a new approach to NDIS supports
for psychosocial disability, focused on personal recovery, and develop mental
health reforms to better support people with severe mental illness (p. 8)
Recommendation 17: Develop and deliver a risk-proportionate
model for the visibility and regulation of all providers and workers, and
strengthen the regulatory response to long-standing and emerging quality and
safeguards issues (p. 13).
The
Bill provides for a new assessment process for gaining entry to the NDIS
via the 2 eligibility streams – early intervention or disability requirements,
or both. It clarifies what supports can be funded by the NDIS and provides for a
new type of participant plan. If the Bill is enacted, all NDIS participants will
transition to a new framework plan budget. Instead of being constructed from a collection
of ‘reasonable and necessary supports’ as is currently the case, new plans will
consist of a ‘reasonable and necessary budget’ which can then be spent more
flexibly by the participant. The Bill also specifies
that funds will not be paid if the payment would exceed the funding amount
specified in the plan or for that funding period (p. 15).
The Financial Impact Statement in the Explanatory
Memorandum for the Bill states that ‘[t]he changes in the Bill are expected
to contribute to decisions made by National Cabinet to moderate cost growth of
the NDIS in the medium to long-term and meet the 8 per cent sustainability
target by 1 July 2026’ (p. 3).
If enacted, the implementation of the Bill would make
extensive use of legislative instruments which are yet to be developed. For
example, legislative
instruments will determine which supports will be excluded from participant
plans, and how a participant’s needs will be assessed (pp. 12–13).
The Bill is
described as representing the ‘the first tranche’ of amendments to the NDIS
Act, suggesting that further NDIS legislation is likely to be introduced.
Budget measures
The 2024–25 Budget introduces a new measure called ‘National
Disability Insurance Scheme – getting the NDIS back on track’, which provides
$468.7 million over 5 years from 2023–24 (Budget paper no. 2, p. 172).
Funding includes $160.7 million over 4 years from 2024–25 (and $24.6 million
per year ongoing) to upgrade the NDIS Quality and Safeguards Commission’s (NDISQSC)
information technology systems and improve NDISQSC’s capability to collect and
analyse data. These improved capabilities are
intended to help NDISQSC protect participants from abuse, reduce the
regulatory burden on disability service providers, and more effectively detect
fraud. These actions may be related to the NDIS
Review’s finding that the NDISQSC has ‘been constrained by inadequate
information and communications technologies investment (p. 230).
This measure also provides $83.9 million over 2 years from
2023–24 to improve fraud detecting information technology systems at the
National Disability Insurance Agency and $23.5 million over 2 years from
2024–25 for Services Australia to continue fraud investigation and response
activities as part of the Fraud Fusion Taskforce (Budget paper no. 2, p.
172-3).
In addition, the measure provides $45.5 million over 4 years
from 2024–25 (and $13.3 million per year ongoing) to establish a NDIS Evidence
Advisory Committee (Budget paper no. 2, p. 172). This action is likely
to be an implementation of the NDIS
Review’s recommendation that the government should ‘establish a new NDIS
Evidence Committee modelled on the Pharmaceutical Benefits Advisory Committee
and the Medical Services Advisory Committee’ (p. 264). The Review recommended
the evidence committee assess evidence-based therapies for NDIS support,
including their cost effectiveness.
Budget paper no. 2 states that the government has
already provided partial funding for this measure, and that additional costs
will be partially met from within the existing resourcing of relevant government
agencies (p. 173).
While these initiatives may be expected to contribute to
moderating the growth in government spending on the NDIS, the budget papers do
not quantify their financial impact. The budget measure is presented as part of
the government’s broader NDIS reforms and projected savings.
With the exception of reforms to disability employment
services (Budget paper no. 2, p. 168), the Budget does not include
details of new large-scale measures or programs providing disability services
outside the NDIS. The NDIS Review found
that while the majority of people with disability rely on services outside
the NDIS, these services are often unavailable or unaffordable (pp. 54-56). It
also found that existing programs, such as the Information, Linkages and
Capacity Building program, largely provide short-term and inadequate services
(p. 57). The government has noted
that significant new disability supports are in the process of development,
and that it will invest $11.6 million over two years for the development and
implementation of a new Foundational Supports Strategy. The Strategy will be
considered by National Cabinet in the second half of 2024.
Budget savings from the 2024
reforms
Budget paper no. 1 states that the NDIS legislative
reforms being undertaken by the government are expected to moderate the $15.9
billion increase in expenditure over 5 years projected by the NDIS Actuary (p. 97).
These legislative reforms include the
Bill currently before Parliament, and are likely to include further legislative
amendments. According to Budget paper no. 1, these reforms should moderate
this additional growth in NDIS payments by $14.4 billion over 4 years from
2024–25 (p. 97).
Minister for the NDIS Bill Shorten stated
that 95% of the savings projected in the 2024–25 Budget would come from 2 aspects
of the NDIS legislation: reducing ‘intraplan inflation’, and changing the way
that plan budgets are constructed from ‘reasonable and necessary supports’ to
‘reasonable and necessary budgets’. The minister said that too many
participants had been overspending their plans and then receiving additional
funding, explaining
that:
… intraplan inflation means that you get a plan for a period
of time, say, for twelve months. What's happening is some participants are
being encouraged to spend all their money within four or five months. And then
there's an automatic top up. That's not on.
The minister also argued that the new framework plans would
reduce NDIS costs, stating
that:
What we want to do is hire trained
assessors and we want to look at a person's total needs. And instead of
constructing a plan brick by brick, we look at a person's overall needs and
give them a budget. We estimate that's actually going to save money … If you
have a whole lot of ingredients from the bottom up, you just create a
whole lot of extra opportunity to see cost blowouts.
There has generally been a critical response to the
announced savings from political and sector stakeholders, mainly questioning the
limited detail provided by the government and how the savings outlined in
the Budget papers would be achieved. The Coalition has commented
that the National Disability Insurance Scheme amendment (getting the NDIS
back on track no. 1) Bill 2024 ‘fails to address provider fraud and price
gouging which are two major issues contributing to cost blowout within the
Scheme’ and has called on the government to ‘outline how the measures in this
Bill will achieve the projected savings and contribute to the overall
sustainability of the NDIS’. Dr Anthony Lowe from the Actuaries Institute has
also noted the lack of detail, stating
that ‘[t]he government have not been very forthcoming on how much planning
they've already done and what costings they've already done’, and has
questioned whether the government’s process of reforms will enable them to
achieve the 8% growth target for the NDIS by 2026.
Senator Jordon Steele-John, the Australian Greens
spokesperson for Disability Rights and Services, has
claimed that the reforms will result in the removal of crucial disability
services, stating that ‘the Labor government is choosing to remove $14.4
billion in funding from the NDIS that will lead to disabled people not getting
the support they need when they need it’.