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It’s budget time! The one day in the year where everybody you know morphs into an expert economist.
On Tuesday, Treasurer Josh Frydenberg delivered the federal budget for 2021-22. In the lead up to the speech, the media had no shortage of NDIS related leaks. The morning before the budget, the ABC reported that the NDIS was slated to cost $30bn by 2024-25. Last week, the Prime Minister Scott Morrison used a pre-budget speech to warn that the NDIS was facing a budget blowout and that they need create “boundaries to ensure the scheme is affordable.”
But aside from the spin and leaks, what did we learn from the budget itself?
AN “EXTRA” $13.2BN
The headline news from Frydenberg’s speech last night was that the NDIS would receive an extra $13.2bn over the next four years. The Treasurer said this:
“In this Budget, we will spend a further $13.2 billion over four years to meet the needs of Australians with disability. As the scheme reaches maturity, our focus is on ensuring its sustainability and that it continues to deliver a high quality essential service for those who need it. Under the Coalition, the NDIS will always be fully funded.”
Wohooo! More money is a good thing for participants, right? Surely there isn’t a catch?
There’s a bit of word play going on here. The NDIS has never been a capped Scheme. The Federal Government was always going to fit the bill for most costs that exceed estimates. So really this just means they are planning to spend more than they thought they would.
By 2024-25, their forecasts suggest that the NDIS will cost $33bn. However, this number deserves a bit more probing. We don’t know the math of how they came to this figure and what assumptions underly it. So it is hard to test the validity of the predictions. For example, $33bn might assume 100% plan utilisation, which is good to budget for but unlikely to eventuate. Moreover, who the hell knows what will happen in the next four years?
SHOULD WE BE WORRIED ABOUT NDIS SPENDING?
The government sure is concerned about the rising cost of the NDIS. Gone are the days when the NDIS underspend was being used to shrink the federal deficit. The government claim that by 2024-25 the NDIS will cost more than Medicare. This is technically true for Medicare alone, but by the same year the federal spending for healthcare overall will be $103.2bn. States and territories also make contributions to healthcare, such as funding public hospitals. The government has also argued the Scheme has overshot what the Productivity Commission projected. In 2011, the Productivity Commission forecast that by full Scheme, the NDIS would cost $13.6bn. Once the details of the Scheme had been ironed out, the NDIA adjusted the estimation to $22bn, which is the figure we mostly still refer to today. It’s been full Scheme for a while now, and we still haven’t spent $22bn, but the costs of the Scheme are certainly increasing. However, in their 2017 report the Productivity Commission estimated that the NDIS would cost $30.6bn by 24-25.
So based on that figure, the government’s claims of a blowout look a tad overblown.
From a Scheme sustainability perspective, the concern seems to be that if the NDIS costs too much the government will just scrap it. But such a decision would for the most part be a political one. For the time being, Frydenberg’s address makes it clear the NDIS is still politically popular. So we probably don’t need to put the NDIS on the endangered species list just yet. A more likely scenario is that if the Scheme gets too expensive the government will seek to reduce participant plans. Which, I mean, they’re doing already based purely on projections.
STRATEGIC DIRECTION
The Social Services budget document also details the strategic focus for the NDIA for the upcoming year. Points they list include:
- Introducing Independent Assessments (IAs)- subject to legislative approval.
- Providing more clarity on reasonable and necessary
- Introducing personalised budgets, which is the NDIA’s new planning model.
None of this is “news” but it does demonstrate that the government is still planning to push ahead with Stuart Robert’s agenda. It looks like despite IAs being on pause, the plan is still roll them out eventually.
NDIA STAFF
NDIA staffing levels are relatively stable between last financial year and the upcoming one. In 2020-21, there were 3,989 NDIA employees which is predicted to decrease ever so slightly to 3,982. I wonder what the 7 jobs are that are no longer considered necessary? Maybe they plan to find 7 staff members who have been leaking to the press…
LESS FUNDING FOR THE QUALITY AND SAFEGUARDS COMMISSION (QSC)
It appears that funding for the QSC will decrease in the upcoming financial year. The budget documents say:
“In 2021-22, income from government will change by $11.3million compared to 2020-21. This represents ending of COVID-19 measures funded in the 2020-21 Budget, the planned tapering of spending on system improvements and the variation in employee benefits and suppliers across years.”
This is a surprising move, given there is currently a Royal Commission into abuse and neglect of people with disabilities.
There will also be a slight drop in the number of QSC staff, from 350 to 342. It is not a big downturn, but it is moving in the wrong direction.
But $12.3m has been promised to align the worker screening process across aged care, disability and veterans affairs over the next 2 years.
DISABILITY SUPPORT PENSION (DSP)
The DSP has not been raised this financial year. Moreover, looking at the government’s projects for the next four years, it does not look like they are planning to give it a bump any time soon.
An increase of $1.1bn over four years it pretty insignificant when you consider population growth in that period.
That’s budget season done and dusted. The main thing we have learned, is that the growing NDIS bill is seriously freaking the government out and that cost cutting is still firmly on the agenda. We can probably safely assume that we will be faced with another year of dramatic reform proposals, huge public controversies and anxiety for everybody involved. It’s like 2020 never left us.
