Opinion & Commentary
A disability insurance scheme offers clear benefits
The federal budget has been and gone again, and despite the de rigueur threat of a ''tough'' year - the cash was flying. Family tax benefits for 16 year olds, digital set to boxes for pensioners - it seems Labor will hand cash to just about anyone with a pulse and a vote.
Anyone, it seems, but some of our most vulnerable citizens. While the rest of us quibble about whether families on $150,000 are really doing it tough, Australians with severe and profound disabilities often fruitlessly struggle to access the treatment and support they need.
A solution may now be on the horizon. In July this year the Productivity Commission will present its final report on a proposed National Disability Insurance Scheme to the Federal Government. Quite separate to the Disability Support Pension, which provides an income for people with disabilities who are not working, the NDIS will cover supports such as therapies, equipment, and respite care.
Currently, there is a patchwork quilt of disability service providers across Australia. Most rely on state and federal government block grants for funding; others struggle to get any funding at all.
Across the sector, there is a gross mismatch between supply and demand. Providers that attract funding may not be those that serve areas of the greatest need; others have little incentive to improve their service once funding is secured.
Many people with disabilities are loath to change providers, because they may not be able to secure a place in another (often over-subscribed) program.
The commission's solution is to overhaul the sector with a centralised voucher system. The NDIS will assess people with disabilities and provide them with a funding package to meet their individual needs.
Individuals and their families can choose a disability organisation to manage their funding package and acquire services on their behalf; alternatively, they can contract these services themselves.
If they are unhappy with a provider, or if they move house, they can simply take their funding with them.
By applying the principles of the free market - competition, consumer autonomy - the commission hopes the disability sector will become more efficient, more innovative and more responsive to individuals' needs.
Of course, there are potential problems. Inevitable calls for the scheme to be expanded to people with less serious disabilities have already begun. There is a danger the scheme could forever inflate, with scarce resources directed to those not in the most need.
There is also a danger that the system will impose costly regulatory and bureaucratic requirements on disability organisations, undermining the drive for efficiency and innovation and pushing smaller operators out of the market.
But the most significant hurdle is the proposal's hefty price. The Federal Government will need to contribute an extra $6.3billion a year to the disability sector - on top of the $6.2billion Canberra and the states already spend.
The commission sensibly rejects the idea of a Medicare-style levy, but acknowledges that this means either sweeping budget cuts or another kind of tax hike will be needed instead.
This is where the difficulty will begin.
With much of the economy sluggish, and the Opposition effectively prosecuting the Government over their proposed carbon and mining taxes, the Government knows that a tax rise would be both political and economic suicide.
The only viable option is to cut spending. We will spend $121billion on social security and welfare this year. There is plenty of money available, if the Government has the courage to make other cuts.
The obvious symbolic place to look for savings is the Disability Support Pension. Taxpayers now spend more than $13billion a year on the DSP, and there is widespread agreement that some of the 800,000 people on the payment could be in the workforce.
But this will be easier said than done. Both the Howard and the Rudd/Gillard governments made DSP reform a core plank of their welfare policy; neither have had any success in reducing numbers.
This is where middle-class welfare must come in. It's absurd that we can afford to provide back-to-school bonuses to middle-income families, but we cannot ensure profoundly disabled Australians have access to treatment, equipment and support.
Is Labor firmly committed to helping those most in need, or just buying off the biggest voting blocs?
The NDIS will bring competition to a sclerotic sector in dire need of an overhaul. But if it is ever to get off the ground, we must make a value judgment about which spending programs have to go. There must be losers.
In the parlance of the current Government, implementing a disability insurance scheme will require both ''hard choices'' and ''tough decisions''. But if there was ever a policy that is worth making them for, this is it.
Jessica Brown is a Research Fellow at the Centre for Independent Studies and author of Defeating Dependency: Moving Disability Support Pensioners into Work (2010).
