Ideas@TheCentre
Prospects for NDIS blowout
The Centre for Independent Studies has played a leading role in the debate on the National Disability Insurance Scheme and the financial sustainability of the scheme into the future.
Many of these issues have finally received widespread coverage following the government’s announcement that it would break another promise and raise another tax by introducing an NDIS levy to help cover the cost of its budget deficit. The opposition quickly followed suit, announcing its support for the tax increase.
The CIS’ work on the NDIS has focused on the prospect of a financial blowout in the scheme, which is expected to provide lifetime care and support to around 441,000 people at a cost of $22 billion a year when it is fully operational in 2018–19.
These figures do not take into account the many additional financial and political risks that could affect the overall cost of the scheme.
In particular, there will be substantial political pressure to expand the scope of the scheme to the 500,000 disability pensioners who will not be eligible to receive NDIS supports. Another 600,000 people aged over 65 years who have a severe or profound disability will also be excluded from NDIS supports.
Despite an annual spend of around $22 billion, future governments will face substantial political pressure from more than 1 million people who have a vested interest in expanding the scheme even further. Disability sector workforce shortages have the potential to drive increases in the overall cost of the scheme as well.
Government expenditure on the NDIS is expected to grow at around 6% every year and has been budgeted accordingly. However, if the experiences of similar schemes like Medicare or New Zealand’s Accident Compensation Corporation are anything to go by, the NDIS could have average annual expenditure growth of around 8% per year, which would make the entire scheme financially unsustainable in the long run.
Andrew Baker is a Policy Analyst at The Centre for Independent Studies and author of The New Leviathan: A National Disability Insurance Scheme.
