NDIS Cost ‘Blowout’ is a Misconception
10 July 2017 at 2:09 pm
Misconceptions about a possible National Disability Insurance Scheme cost “blow out” need to be put to bed, a new report examining the economics of the NDIS has revealed.
The Citi Australia report, authored by economists Josh Williamson, Paul Brennan and Vivian Jiang, said questions over the scheme’s financial sustainability and value for money were “largely unfounded”.
“The net new cost of the NDIS at scheme maturity is below the total estimated $22 billion,” the report said.
“A misconception is that the NDIS requires 100 per cent new funding. The NDIS does not require this amount because the scheme is expected to reduce the funding required for a range of existing federal and state government programs.”
The report said offsets to the value of $11 billion had been identified by the Australian government actuary in 2011 and needed to be included in the equation.
“The net cost of the NDIS, is therefore closer to $11 billion which is equivalent to just 0.6 per cent of GDP in 2020,” the report said.
The report said the NDIS was a “quantum leap” from the traditional model of funding and at full maturity would deliver GDP benefits of up to $23 billion.
“The NDIS is designed to be more equitable and sustainable than the system it replaces,” the report said.
“The pre-NDIS funding model was grants-based, supplier driven, highly regulated, inequitable and inconsistent across state borders.
“Funding changes by governments were applied inconsistently and on an ad-hoc basis, creating volatility and uncertainty.”
The report took the view, as concluded by PricewaterhouseCoopers, that the pre-NDIS system would have exceeded the cost of the NDIS by 2025.
The report also found that by creating new jobs and assisting people with disabilities, and carers, into the workforce the net benefit of the scheme could be between $18 to $23 billion.
According to the report the scheme requires 70,000 new disability support workers, would enable between 25,000 and 40,000 full time equivalent jobs for people with disabilities and 34,000 full time equivalent jobs for careers.
The report concluded that despite debate in the public realm about cost blowouts due to higher than anticipated participation rates and lower exit rates the NDIS was largely “on track”.
“This groundbreaking policy will have significant employment and economic impacts,” the report said.