Major Cost Pressures Ahead for NDIS

By Andrew Heaton

(image via NDIS software)

Higher than expected numbers of children, increasing package costs and more people than expected continuing to access the scheme have emerged as significant challenges for the agency which administers the National Disability Insurance Scheme as the scheme strives to accommodate 460,000 participants by 2019/20 within a cost of $22 billion per year, according to the latest report.

Releasing its latest report, the Productivity Commission says it is seeing feedback on 70 discussion points with regard to the NDIS covering areas such as how the scheme will be paid for, governance and administration arrangements, market readiness, scheme costs and planning processes.

According to the report, the most reliable estimate of annual costs for the scheme comes from comes from the NDIA and suggests that costs will reach about $22 billion per year by 2019/20.

Those estimates, however, were made in 2011, when the scheme was expected to cover just 411,000 participants by that time as opposed to the 460,000 participants it is now expected to cover by that time.

Moreover, the report said that significant cost pressures had been identified during trial sites.

These include:

  • Higher than expected numbers of children accessing the scheme, especially in South Australia, Victoria and the Australian Capital Territory.
  • Increasing package costs over and above the rate of inflation.
  • Fewer people existing the scheme compare with what was expected (particularly children who entered the scheme under early intervention arrangements).
  • Mismatches between benchmark package costs and actual costs.

The report also highlighted concerns about the capacity of the workforce to handle the scheme’s full rollout.

Around 60,000-70,000 additions workers are expected to be needed for the scheme, but there is evidence that finding and recruiting staff could be challenging.

In 2014, for example, a survey by the Department of Employment found that 26 percent of firms which specialise in disability support were forced to often employ staff who were not qualified or who lacked experience.

In addition, jurisdictions such as South Western Sydney, South Melbourne and Beenleigh in Queensland currently have less than 40 percent of the expected workforce that is needed.

In particular, speech therapists, occupational therapists and psychologists are proving difficult to find in some areas.

The latest report comes amid political bickering over the funding of the scheme amid efforts on the part of the government to quarantine around $3 billion in savings from welfare cuts which have been presented to Parliament to be spent on the scheme.

Without this, plus another $1 billion which has been earmarked from savings by axing carbon tax compensation for future welfare recipients, the government says the scheme would have a $4 billion black hole attached to it which would have to come from higher taxes or reduced spending elsewhere.

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