‘Costs are going up’: Linda Reynolds warns of hard discussions on NDIS funding
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Linda Reynolds has signalled the Morrison government will top up funding for the National Disability Insurance Scheme in Tuesday’s budget but she warns there are “hard discussions” ahead regarding the sustainability of the current funding model.
In Reynolds’ first significant interview in the portfolio she gained following the Brittany Higgins furore, the minister in charge of the NDIS said she needed to open a conversation about the scheme because it was “now on the trajectory of being more expensive than Medicare”.
“I’m certainly not saying to the states and territories that we need to renegotiate things tomorrow, but it’s also very clear, and they can read the figures as much as I can, that we all share a common goal,” Reynolds told Guardian Australia.
“We want this scheme to be enduring and sustainable for many generations to come, and it’s at the point now that we’ve got many more people coming onto the scheme than we ever thought, packages are more expensive, and costs are going up.”
Related: Head of NDIS grilled on ‘insulting’ disability assessment questions, including about sex
Reynolds said she would be “derelict in my duty as a minister if I avoided these hard topics and discussions, because if we don’t start having these conversations now, and start looking at what is the sustainable pathway for growth, then the scheme will not be viable in the medium or long term”.
The new minister says an initial underspend in the NDIS masked the upward trajectory of future spending in the scheme. “Unfortunately what that underspend hid, or didn’t make clear, was the average cost of the packages was far greater than had been anticipated in the agreements with the states and territories.”
She said before the Covid-19 crisis hit and the commonwealth budget was in surplus “that increase in average package costs was hidden, or it wasn’t obvious”. But now significant growth in the number of participants had put the NDIS “over budget”.
Reynolds initially buoyed disability advocates when she took the portfolio after a ministerial reshuffle in March because she paused controversial plans to roll out independent assessments by the middle of the year.
Advocates fear the proposed assessments, which have also been criticised by members of the government, are a cost-cutting measure. The pause Reynolds imposed followed months of sustained campaigning from disability groups as well as Labor and the Greens.
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Reynolds said the pause was continuing, but she signalled the government would have to proceed in time with “respectful” and “fair” independent assessments for NDIS participants because at the moment “your postcode absolutely determines your package”.
She said taking stock was necessary because people had come into the NDIS from state and territory schemes without an independent assessment. Reynolds also argued the process was required as an equalising tool.
“If you are in Halls Creek or Alice Springs, on average, you get a lower package for a similar disability than a person in Double Bay, or Dalkeith in Perth,” Reynolds said. “Where you live and your socio-economic status absolutely makes a difference.”
She said Australians with more resources “can afford to get good advice, and good advocacy and the best possible medical advice and reports – you are able to navigate the system better and get the best possible outcome”.
But Reynolds acknowledged the assessments had triggered considerable angst in the community “and in some cases fear” – and she said she would not proceed until she had reached a better consensus about how the process would be structured.
The new federal minister conceded she could not give anyone a guarantee that they would not be worse off after having an assessment once that system was operational.
Guardian Australia reported last month that secret government documents from last year showed it expected the introduction of independent assessments would save the budget $700m and lead to smaller funding packages “on average”.
Related: Linda Reynolds says Coalition will keep ‘some form’ of independent NDIS assessments
The agency that runs the NDIS has also quietly established a new taskforce aimed at cutting growth in funding packages and participant numbers. An internal document seen by Guardian Australia that shows the National Disability Insurance Agency has created a new unit to make “short term, immediate changes” to the scheme, citing a forecast “cost overrun in 2021-22”.
But Reynolds contended the primary purpose of introducing the independent assessments wasn’t cost cutting, because the conversation about sustainability in the scheme was much bigger than any impact created by assessments.
Reynolds said this year Canberra would pay 51% of the costs of the NDIS, and next year that would be 54%. She said the scheme had already been topped up once and would be again next Tuesday.
“The agreements we had with the states and territories was a fixed cost, based on an assumption that the scheme costs would be lower than they are,” the minister said.
“No state or territory minister has ever cried about the commonwealth paying more, but that’s actually not sustainable – costs are now going up 14% per year compound.”
Reynolds said she would also need to investigate why people who came into the scheme in 2017 now had packages that were, on average, 50% more than at the time of their arrival.
“I’ve asked the question. I don’t know what the answer is. What is suggests is either the scheme is failing, and people are regressing, or when they are coming up for their reassessments for some reason, they are either genuinely decreasing in functionality, or they are being under or over assessed.
“I don’t know what the answer is but I think it’s important we get to the bottom of it.”