Have we been misled about NDIS fraud?

Back in August 2022, Australia’s Criminal Intelligence Commission’s (ACIC) Chief Michael Phelan went on 60 Minutes to talk about fraud – specifically, NDIS fraud. Phelan estimated that 15% to 20% of NDIS funding was lost to fraud. This was calculated to be $6bn a year. These figures have been picked up and repeated in both progressive and conservative newspapers. The Courier Mail just last week rather magically smooshed together this estimate with rising Scheme costs to predict $12bn could be lost to fraud each year.

These are alarming figures, but according to information released in two FOIs, we should have some serious questions about their accuracy.

The accuracy of these figures matters a lot right now. Significant policy has been developed on their basis, with the Albanese government committing $126 million to fund a Fraud Fusion Taskforce. Calls for additional drastic policies have intensified – fraud figures have also been deployed to support mandatory registration for providers.

Testing ACIC’s claims

In an FOI, we asked ACIC for:

1.     any document modelling or informing Michael Phelan’s statement that 15%–20% of the NDIS or $6 billion is being lost to fraud;

2.     the total dollar amount of alleged NDIS fraud being investigated, or investigations coordinated, by ACIC.

The FOI response was heavily redacted, and the 15%–20% and $6bn figures were certainly nowhere to be found. Unless, of course, those figures were hiding under all the black text, which we can only assume was put there to stop the government leaking transparency everywhere.

Cheekiness to one side, two pieces of relevant data were helpful:

• A statement found in the 2019 Organised Crime Risk Assessment that fraud in Commonwealth-funded programs “almost certainly totals well over a billion dollars a year”.

• ACIC’s talking points for Michael Phelan’s 60 Minutes interview refer to this research: “For background, the Australian Institute of Criminology assessed that in 2020–21, serious and organised crime cost Australians $60.1 billion, with $9.4 billion attributed to organised fraud”.

 ACIC’s did not answer our second question.

According to the FOI, the ACIC believes $9bn in total is lost to fraud. So, if Phelan’s claims that up to $6bn or 20% is lost to NDIS fraud is also accurate, the remaining $3bn of fraud must be lost through all other “organised fraud”. Yes, that includes taxation, social security, and … every-freaking-other-type-of-organised-fraud combined.

In other words, we’ve been asked to believe that the cunning NDIS fraudsters are sneakier than all the fraudsters cheating all other programs – combined – by a factor of two. I get that this was the upper end of Phelan’s estimation, but it is still asking us to suspend disbelief.

 Not having gotten any clarity from ACIC, I turned to the NDIA for the fraud that they’re allegedly emptying out of the Scheme. Their most recent 2022–23 quarterly report (Q2 of Y10) highlighted that, at 31 December, there was $13.4 million dollars being investigated for alleged fraud. Yes, that is million with an “m” and an “a” for alleged.

Can we blame unregistered providers for fraud?

In August 2022, El Gibbs dropped an article called “Is a crackdown on unregistered providers coming” – you can find it here. Gibbs, whom I’m beyond excited to see at DSC’s conference, cited a since-deleted Labor Party advertisement that explicitly linked unregistered providers to fraud.

Gibbs’s article sparked my curiosity about what data the NDIA collects on unregistered providers and fraud. According to our FOI, of the $13.4m the NDIA is investigating for fraud, only $6.8 million involved unregistered providers as of September 2022. In other words, unregistered providers made up roughly half of all alleged NDIS fraud.

Interestingly, the NDIA FOI also revealed one of the ways they sample for fraud:

The NDIA conducts sample testing of 100–150 claims per month, randomly selected across all claimants and claim types, including those made by unregistered providers. Of the 1,436 claims reviewed in 2021–22 financial year, 21 from unregistered providers were found to be erroneous claims. (NDIA FOI 2022)

But the NDIA’s FOI cautioned against using these figures to arrive at losses to fraud, noting that errors may be unintentional.

Only 21 erroneous claims (including some unknown number of genuine mistakes) by unregistered providers in a sample of 1,463 feels pretty reasonable. It certainly doesn’t fit the “NDIS has gone bust” or “catching the crooks” narrative.

Fraud is obviously vile. It matters, and it deserves attention. But what is the cost of having a system built on trust?

On the Summer Foundation podcast, Dr. George Taleporos recently spoke with disabled people about the importance of being able to access unregistered providers and exercise true choice and control over their plans – it can be found here. In the episode before, Dr. George also went into great depth with the NDIA about how disabled people can protect themselves against fraud. The Agency also has some pretty slick resources on protecting your plan from fraud here.

 The fraud narrative unites the old, tired tropes of only ever-vulnerable disabled people and hardened, opportunistic criminals. Good leadership, in contrast, requires the slow, gritty work of first understanding and communicating whether, where, and why the NDIA is leaking money to fraud. And in order for this response to improve the lives of disabled people rather than portray them as victims or scammers, it needs to be led by disabled people.