NDIS blowout could hit $102b, overtaking the age pension

The budget papers project the federal government’s contribution to the cost of the NDIS will grow by 13.8 per cent a year over the next decade, while state contributions are now fixed at 4 per cent.

This implies the cost of the scheme could hit $102 billion by June 2033, at which point the federal government would be on the hook for an $88 billion annual contribution.

‘Worst possible nightmare’

Spending on the scheme has blown out by $8.4 billion since the Coalition’s final budget in March, and is tipped to cost taxpayers $51.8 billion in 2026.

Disability Minister Bill Shorten revealed the blowout last week as he brought forward a 12-month review into the scheme’s operation, sustainability and responsiveness to participant needs.

Veteran budget watcher Chris Richardson said dealing with the NDIS was one of the greatest budgetary challenges facing the government.

“The worst possible nightmare of a political fight that any government could face is one that pits the interest of disabled Australians against the interest of taxpayers – both of whom have genuine grievances here,” he told The Australian Financial Review.

Less than 10 years since its creation, the NDIS has become one of the most expensive line items in the federal budget; official forecasts from the NDIA project the program will cost taxpayers almost $60 billion annually by 2030.

The government will spend more on the NDIS this year than Medicare ($31.3 billion), aged care ($27.1 billion), support for state government hospitals ($26.6 billion) and the Pharmaceutical Benefits Scheme ($18.1 billion).

The government has allocated $18 million over two years for the NDIS review.

Mr Shorten said last week the review was “not about a razor gang and cost cutting” and would focus on improving the scheme.

The review will be co-chaired by Melbourne Disability Institute chairman Bruce Bonyhady and former senior public servant Lisa Paul. Other panellists include former Queensland anti-discrimination commissioner Kevin Cox, former NDIS co-ordinator Dougie Herd and Autism Co-operative Research Centre chairwoman Judy Brewer.

Fraud taskforce

The budget papers say the continuing increase in NDIS costs reflects the sustained growth in participant numbers and higher average support costs per participant.

As at June this year, there were 534,655 NDIS participants. The NDIA’s annual financial sustainability report projected this number to increase to 670,000 by June 2025 and almost 860,000 by June 2030.

The Productivity Commission forecast in 2017 that 582,860 Australians would use the scheme in 2030.

The average NDIS participant receives $55,200. The figure has increased 9.2 per cent annually over the past three years.

In an effort to rein in spending on the NDIS, the government will tip $126 million into establishing a cross-agency Fraud Fusion Taskforce to crack down on fraud and serious non-compliance with the program.

Australian Criminal Intelligence Commission chief executive Michael Phelan warned in August as much as $6 billion of the scheme’s annual budget could be subject to fraud.

The budget papers estimate the taskforce will raise $292 million in recoveries, putting a modest dent in the scheme’s increasing cost.

The government has also tipped more than $30 million into dealing with the backlog of Administrative Appeals Tribunal (AAT) cases involving NDIS participants.

This includes $21 million to providers to support participants and $12 million to introduce an expert pathway to resolve disputes before they reach the AAT.