Government to crack down on billion-dollar fraud as part of NDIS overhaul

Labor will crack down on fraud and rip-offs inside the national disability insurance scheme, amid warnings that criminal gangs may be fleecing more than $1bn annually from the scheme.

New NDIS minister Bill Shorten also warned the scheme “can’t subsidise everyone in Australia”, flagging more support for people with less severe disabilities outside the top-tier framework, as Labor looks to reforms of the system it set up in 2013.

“It’s a bureaucratic nightmare for people on the scheme. It’s a maze of red tape. In my opinion I’ve seen waste,” Shorten told the ABC’s Insiders program on Sunday.

“Also a concern that serious organised crime is accessing these payments opportunistically.”

The Herald Sun reported on Sunday that the Australian Crime and Intelligence Commission claimed as much as 5% of the $29bn scheme – or $1.45bn – is being stolen each year through fraud, including through falsified bookings, inflated invoices, or invoices charged through stolen information. Organised crime gangs were also said to be targeting the NDIS.

Guardian Australia has contacted the ACIC for comment, but Shorten confirmed he was concerned by the trend, and that the incoming Labor government would look to take action.

“I started to read disturbing reports from criminal intelligence analysts that as a government payment scheme, the same people in organised crime who were taking money out of the Family Day Care Scheme are now moving across into NDIS, obtaining people’s personal information, false invoices, overpaying of bills, ghost payments,” Shorten told Insiders.

“There’s very few things more despicable in life than crooks taking money, which is due to go to disabled people.”

He said Labor had “all options on the table to make sure we protect taxpayer money”, claiming the former Coalition government had not done enough to stop fraud or investigate criminals targeting the disability sector.

Aside from criminal activity, Shorten also said he wanted to see the NDIS have a more transparent pricing model for service providers, claiming there may be a “twin rate” where a disabled person is charged more if they use a government-sponsored package.

“The only way the NDIS can fulfil its potential is by involving people with disability in the co-design of the scheme. There was a 10-year review of the scheme due next year. We’re bringing that forward,” he said.

“I’ve only just looked under the hood, but I am putting on notice that we want to have a pricing system which makes sense to everyday people.”

Shorten, an early advocate of the NDIS in his role as parliamentary secretary for disabilities under the Rudd government in 2010, also flagged an expansion of secondary disability services outside the scheme.

He said the NDIS was currently “the only lifeboat in the ocean for Australians who live with disability” but that it “can’t subsidise everyone”, suggesting changes to how schools, hospitals and health systems cater to people with disabilities.

“It’s aimed for the most profoundly impaired and severely disabled Australians … So the challenge there is to sit down with our brothers and sisters in the states and say, what are you doing in the school system to provide additional support for kids with special needs? The NDIS can’t replace the school system,” Shorten said.

“We have to sit down with people in the community health sector and the health sector and say it can’t be the case that if you have a serious mental illness, that you either get NDIS or you’re in hospital and there’s nothing in between.”

“I’m not saying there should be fewer participants, but what I am saying is that one of the contributing factors to people doing whatever they can to get into the scheme is it’s a wasteland outside it. So what we need to do is have a conference. The NDIS was never meant to be the only way in which we give people with disability and their carers an ordinary life.”

Shorten also hinted at changes to accreditation and registration requirements for service providers, and relaxing red tape around assessment of disability claims, with the aim to “reduce the number of cases in the administrative appeals process”.

“I’m saying to people watching this show, one, we will run the scheme more efficiently and empathically. Two, we’ll sit down and look at some of the long-term pressure so it’s not just a lifeboat in the ocean,” he said.

“I just want us to have the world’s best scheme which is consistent with taxpayer value. But even more importantly, disability could be any of us at any time. Why not give people a fair go in life by some modest support? Smart and generous.”