Disability Funding is No Charity – It’s an Investment

Economics Lecturer at Deakin University, Elizabeth Manning, explores why making predictions on the NDIS based on its first few months of implementation makes no sense at all in an article first published on The Conversation.

Treasurer Joe Hockey warned [last December] of a “massive blowout” in the National Disability Insurance Scheme (NDIS) if the system wasn’t made more efficient.

This follows subtle repositioning of the government’s stance on the NDIS since the election.

Tony Abbott referred to the scheme as a “trial” rather than a “launch” after the recent COAG meetings. And back in November, a key adviser to the government, the head of the Prime Minister’s Business Advisory Council Mr Maurice Newman, identified the NDIS as a “worthy cause”, but one which it was “reckless” to support in times of economic difficulty.

The “worthy cause” part of his speech is patronising, offensive and anachronistic; the “reckless” part is ill-informed and patently incorrect.

Aside from the fact that the NDIS is set up to provide only “reasonable and necessary” services, Hockey and Newman are missing the bigger picture: investment in disability support now will deliver savings later.

Cost shifting

It’s true that for years, people with disabilities and their families relied on charity to meet basic needs. Government support for disability was chronically underfunded and dysfunctional, resulting in huge inefficiencies.

Appropriate and essential equipment couldn’t be purchased in a timely or cost-efficient manner. And resources were wasted on finding band-aid solutions. As a result, underlying conditions would deteriorate, driving up later treatment and rehabilitation costs.

Cost shifting between the states and the Commonwealth meant one arm of government would avoid a small liability by creating a much larger liability for another arm. Keeping people in rehab hospitals or nursing homes to avoid paying for a bathroom renovation, for instance, costs taxpayers much more overall.

A system in crisis meant families were often in crisis as well. Sometimes this manifested in families having to “abandon” their loved one with a disability; this is a tragedy for all concerned. Precious respite beds are then taken up for longer term care, creating another spiral of crisis.

There is nothing efficient about leaving people with disability and their families to spiral into crisis, when informal family carers continue to save taxpayers significant costs. People providing informal care are the most vulnerable group in the country, with the lowest levels of well-being and the most prone to poverty, marriage breakup and depression.

But they subsidise taxpayers to the tune of A$33 billion a year by providing informal care. The NDIS, when fully operational, will only reduce this figure by about A$7 billion.

If I was a treasurer concerned about saving money and managing liability, I’d be trying pretty hard not to break this particular golden goose.

Strong foundations

The talk of cost blowouts is ill-judged. Speaking from my experience at the Geelong (Victoria) launch site, the roll-out deliberately targeted people with the most need, who had been waiting longest, for the first plans. Of course the early stages would be more expensive; these early plans were breaking the drought for people with the highest level of unmet need.

In addition, this is a massive change brought in quickly, and systems are being streamlined all the time. To judge and make predictions on the cost of the scheme based on the first few months of implementation makes no sense at all.

I’m an economist. I believe in efficiency. But there was almost nothing about the old approach that was efficient.

The new system is based on insurance principles and contestable markets. Inefficient service providers who don’t meet client need will go out of business. Early investment in support, along with data collection and research in best practise, will build efficiencies and improve outcomes.

I want to pay less taxes too – so I want the government to invest in Australians with a disability so we can increase the number in employment, and reduce the number relying on welfare to survive.

Australia is close to the bottom of the table amongst comparable OECD countries for labour force participation of people with disabilities – and at the very bottom for poverty outcomes. A PwC report in 2011 estimated that increasing employment participation by people with disabilities could add A$50 billion, or 1.4 per cent to GDP by 2050.

The NDIS makes cold, hard dollar sense. Thinking about it as some sort of welfare to be cut in bad times allows old-fashioned prejudice against people with disabilities to trump efficiency and money-saving investment.

Client-led planning

There is nothing about the principles behind the NDIS, the legislation or the rules that need to be made more efficient. Indeed, the very idea of enabling choice in the hands of the individual, along with contestable private markets, is a core liberal ideology.

The enabling bureaucracy must operate efficiently and effectively. To this end, my advice from a launch site is to avoid a tendency to over control the processes.

For example, insisting on additional “independent” assessment of equipment needs, over and above the advice of specialists already involved with the person, is an unnecessary duplication of process. And trying to tie families down six months in advance about whether a period of personal care will be provided before or after 8pm to allocate bureaucratic line items is a little overzealous.

Planning should be flexible and client-led with coordination available from an advocate of the client’s choice, then reviewed and approved by the National Disability Insurance Agency.

Inevitably there are teething issues, but these are being reviewed and worked through right now. The vision, embodied in the legislation and rules, is sound, efficient and cost-effective.

In no way should entitlements be capped, wound back or limited from what is intended in the legislation. After all, only people with significant and permanent disability are eligible – this is already a strict entry requirement.

Everything provided under the NDIS already has to meet the test that it is “reasonable and necessary”. It can’t be wound back without, by definition, denying those reasonable and necessary supports.

The NDIS was absent from the election campaign, neutralised by strongly articulated bi-partisan agreement. Hockey’s comments are not about efficiency and cost, they are about politics – and it is the intent behind the politicking that is worrying.