Australia Moves to Rein In Ballooning Cost of Disability Program

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(Bloomberg) — Australia’s center-left government is moving to rein in the ballooning costs of its signature disability welfare program as it tries to frame next month’s budget against the backdrop of a global energy crisis.

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Under a planned crackdown on eligibility, fraud and greater oversight of providers in the National Disability Insurance Scheme, the government estimates that instead of costing more than A$70 billion ($50 billion) in 2030, taxpayers will spend around A$55 billion.

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“We can’t afford for the NDIS to continue growing at its present rate,” Health Minister Mark Butler said in Canberra on Wednesday. “But far more importantly, we can’t afford for the NDIS to fail.”

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Butler said he will introduce legislation to parliament when it resumes next month to secure the future of the disability program based on four pillars:

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As a result of new eligibility rules, modeling shows the number of people on the scheme falling to around 600,000 by the end of the decade instead of growing to well over 900,000. There are currently 760,000 people on the NDIS.

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The Labor government is under pressure to control spending on the NDIS — which at one point was growing at more than 20% a year — with the budget expected to stay in deficit over the forecast horizon. Treasurer Jim Chalmers, who will hand down his fiscal blueprint on May 12, is also contending with massive increases in defense spending, a slowing economy due to the Middle East conflict and potential further monetary tightening by the Reserve Bank.

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The NDIS is Australia’s system for funding long-term support for people with significant and permanent disabilities that sought to move away from a patchwork welfare model. NDIS offers tailored plans to individuals based on their needs, including therapy, assistive technology or personal care support. 

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“Part of the challenge we face is that the NDIS has become a soft target for shonks and rorters – as well as the worst elements of organized crime,” Butler said in a speech to the National Press Club. “The scale and chaotic nature of the NDIS market is distorting other parts of the care economy.”

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“All of this is hitting the scheme’s community support, or social license,” Butler said.

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The minister cited a recent survey showing while 7 in 10 Australians still agree the NDIS plays a vital role for people with a disability, 7 in 10 also think it’s gotten too large and struggles with dodgy providers. “Worse still, more than 6 in 10 think it’s actually ‘broken’,” Butler said.

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When the NDIS was first launched, the goal was not just care, but improving independence, helping people participate in the workforce where possible, and reducing long-term social and economic costs. It’s widely seen as one of the most significant social policy reforms in Australia in decades.

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Yet the program has swollen as the interpretation of what counts as “reasonable and necessary” support broadened, partly through policy changes and partly tribunal and court decisions. 

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One of the sharpest criticisms of the program remains that genuine disability recipients are sometimes turned away even as opportunists exploit the system. 

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—With assistance from James Mayger.

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