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National Disability Insurance Scheme (NDIS) Costs

Position paper

This position paper outlines the Commission's early thinking on NDIS costs. The purpose of this position paper is to seek feedback on the Commission's preliminary conclusions, and on any additional issues that should be considered before the public release of the final study report.

This position paper was released on 14 June 2017. You are invited to examine the paper and to make a written submission or comment by 12 July 2017.

The final report will be handed to the Australian Government in October 2017.

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  • Key points
  • Media release
  • Contents summary
  • The National Disability Insurance Scheme (NDIS) is a complex and highly valued national reform. The scale, pace and nature of the changes it is driving are unprecedented in Australia. If implemented well, it will substantially improve the wellbeing of people with disability and Australians more generally.
  • The level of commitment to the success and sustainability of the NDIS is extraordinary. This is important because 'making it work' is not only the responsibility of the National Disability Insurance Agency (NDIA), but also that of governments, participants, families and carers, providers, and the community.
  • Based on trial and transition data, NDIS costs are broadly on track with the NDIA's long-term modelling. While there are some emerging cost pressures (such as higher numbers of children entering the scheme), the NDIA has put in place initiatives to address them. The benefits of the NDIS are also becoming apparent. Early evidence suggests that many (but not all) NDIS participants are receiving more disability supports than previously, and they have more choice and control.
  • Nevertheless, the speed of the NDIS rollout, as specified in Bilateral Agreements between governments, has put the scheme's success and financial sustainability at risk. It has resulted in the NDIA focusing too much on meeting participant intake estimates and not enough on planning processes, supporting infrastructure and market development.
    • This focus is manifest in poor outcomes such as confusion for many participants about planning processes; rushed phone planning conversations; inadequate pre-planning support for participants; problems for providers with registering, pricing and receiving payment; and a lack of effective communication with both participants and providers.
  • For the scheme to achieve its objectives, the NDIA must find a better balance between participant intake, the quality of plans, participant outcomes, and financial sustainability. Steps are now being taken by the NDIA to better balance these aspects. Greater emphasis is needed on pre-planning, in-depth planning conversations, plan quality reporting, and more specialised training for planners. The Commission is unable to form a judgment on whether such a refocus can be achieved while also meeting the rollout timetable.
  • The interface between the NDIS and other disability and mainstream services is also critical for participant outcomes and the financial sustainability of the scheme. Some disability supports are not being provided because of unclear boundaries about the responsibilities of the different levels of government. Governments must set clearer boundaries at the operational level around 'who supplies what' to people with disability, and only withdraw when continuity of service is assured.
  • A significant challenge is growing the disability care workforce required to deliver the scheme — it is estimated that 1 in 5 new jobs created in Australia over the next few years will need to be in the disability care sector. Present policy settings are unlikely to see enough providers and workers as the scheme rolls out. Some emerging shortages need to be mitigated by better price monitoring and regulation; better tailored responses to thin markets; formal and informal carers allowed to provide more paid care; and a targeted approach to skilled migration.
  • NDIS funding arrangements could better reflect the insurance principles of the scheme, including by allowing more flexibility around the NDIA's operational budget and providing a pool of reserves. Funding contributions made 'in-kind' must be phased out.

Early days, but NDIS costs on track

'The National Disability Insurance Scheme (NDIS) is a major, complex national reform — the largest social reform in Australia since the introduction of Medicare,' Social Policy Commissioner Richard Spencer said.

In 2020, when the NDIS is fully rolled out, around 475 000 people with disability are expected to receive individualised supports, at an estimated cost of $22 billion per year.

In a position paper released today, the Commission finds that while it is early days in the transition to full scheme, the NDIS is on track in terms of costs.

'While there are some emerging cost pressures, such as higher than expected numbers of children entering the scheme, the National Disability Insurance Agency (NDIA) has put in place initiatives to address these cost pressures,' Commissioner Angela MacRae said.

'Given the extraordinary scale, pace and nature of the changes the scheme is driving, we are seeing some big challenges. A key concern is the speed of the rollout and its impact on the experience of participants and providers through the planning process, plan quality and market development,' Mr Spencer said.

'A real challenge is growing the disability care workforce needed to deliver the scheme. As many as one in five new jobs created in Australia over the next few years will need to be in the disability sector. There are unlikely to be enough providers and workers as the scheme rolls out under current policy settings,' Mrs MacRae said.

The paper finds that the NDIA must place greater emphasis on pre-planning, in-depth planning conversations, plan quality reporting, and more specialised training for planners. And governments must set clearer boundaries around who supplies what, so that people with a disability are assured of continuity of service.

'Everyone wants the NDIS to work, but there are challenges to be overcome and work is needed by all governments. Putting the enormous goodwill behind the NDIS into action is needed now more than ever,' Mr Spencer said.

The Productivity Commission's position paper is National Disability Insurance Scheme (NDIS) Costs.

People who want to comment or make a submission for the final report, due to be released in September, can do so at pc.gov.au

Background information

Leonora Nicol (Media, Publications and Web) 02 6240 3239 / 0417 665 443

Chapter 1 presents relevant background information for this paper.

Chapter 2 looks at how the scheme is tracking based on scheme experience to date.

Two of the key drivers of cost are then discussed in more detail in chapters 3 and 4 — the scheme eligibility (which determines the number of participants in the scheme), and the supports NDIS participants receive (as determined by the planning process). These components essentially form the demand for NDIS services.

Chapter 5 looks at how the NDIS interfaces with non-NDIS disability services and mainstream services and the ways in which this impacts on the financial sustainability of the scheme.

Chapters 6 and 7 look at the supply side of the equation. Chapter 6 assesses whether providers will be capable of meeting demand for disability services and chapter 7 analyses workforce readiness.

Chapter 8 looks at whether participants have the knowledge and skills to successfully engage with the scheme.

Governance arrangements are discussed in chapter 9 and chapter 10 looks at funding arrangements.

Printed copies

Printed copies of this report can be purchased from Canprint Communications.