NDIS Act Explained: Debts

On the 3rd October 2024, the Getting the NDIS Back on Track [no 1] Amendment Act came into effect. In this series, ‘NDIS Act Explained’, we deep dive into different areas of the legislation.

Under the new legislation, the NDIA has compliance powers for when it believes a provider or participant has wrongly spent NDIS money. This includes the ability to raise debts.

Getting across debts and compliance powers is a matter of urgency, particularly for providers. From 30 days after the 3rd October 2024 (a time period already lapsed) a debt could be raised against providers for acquiring or providing services that aren’t an ‘NDIS support’.

All this is happening in the context of fraud being on everyone’s lips. Since 2022, the Department of Social Services has mentioned fraud in 148 media releases. In the latest federal budget, the government included $83.9 million to boost fraud detection, and in 2023-24, provided a further $23.5 million for expanding the Fraud Fusion Taskforce.

When can the NDIA raise a debt against a participant or nominee?

The ability to raise a debt existed long before the new legislation. But new detail in section 46 of the Act now outlines specific situations when the Agency will raise debts.

A participant or a person acting on behalf of a participant (like a nominee or child representative), can receive a debt if they spend NDIS funds:

• on a support that is not an “NDIS Support” for the person; or
• not spent “in accordance with” the person’s plan.

To rehash, an “NDIS support” is determined by seeing whether the support is on the new “in list” and off “out list” in the new Transitional Rules (read more: NDIS Support Lists released- finally!). These lists, and what’s in a person’s plan, now determines whether a support can be purchased and whether the Agency can legally raise a debt.

Can the NDIA raise debts against providers?

Yes. The NDIA can also raise a debt against a person other than a participant (e.g. a plan manager or provider), where the third party acquires or provides a support to a participant that:

1. is not an NDIS support; or
2. does not comply with the person’s plan; and
3. the NDIA paid for it

To avoid spending on things that are not “NDIS supports”, providers and participants alike need to be across the new “in” and “out” Lists.

What other compliance powers does the NDIA have?

The NDIA does not necessarily need to raise a debt against a participant as the first option. There are now two other tools in its compliance belt. The NDIA can:

• change someone’s management style to Agency- or Plan-Managed (against their preference); and
• reduce a person’s funding period. This is how often funding is released from a plan. For example, for a person who could previously access 12 months funding at once, the NDIA could change it to 6 months at a time.

The NDIA’s decision to vary a plan management style or funding period is reviewable.

What safeguards and transitional arrangements are in place?

The NDIA has implemented transitional arrangements for participants for 12 months.

The NDIA will not raise a debt when the participant if:

• the support they purchased was less than $1500; and
• they have not yet received two warnings.

On Summer Foundation podcast with Dr George, the CEO of the NDIS Rebecca Falkingham also said “we’ve made a bit of a tweak in the Agency that if the Agency was ever to pursue a debt against a participant it would need to be signed off by me first.” Falkingham distinguished participants from providers here. It is also not clear at this stage whether any future CEO or government would also follow Falkingham’s process.

Is a debt appealable?

Yes and no.

No: There is no reviewable decision under section 99 of the NDIS Act to review the decision to raise a debt.

Yes: The NDIA’s decision not to “waive” a debt is appealable (details below).

How can a person appeal an incorrect debt?

The person may apply to the NDIA to waive the debt. I don’t know how the Agency wants people to apply to have a debt waived – at the time of writing, six weeks after the laws came into effect, I couldn’t find a form, an operational guideline, or anything on their website. But in parliament last week, the Acting CEO of the NDIA revealed a new executive committee has been established to work through this detail.

But if you find yourself with a debt, I imagine you can reach out to the NDIA directly on 1800 800 110.

The onus is on a person to convince the NDIA to waive the debt.

The NDIA can waive the debt if they made a mistake in raising it and it is inefficient to pursue it. The NDIA can also waive the right to recover debt if:

1. the debt did not result from the person knowingly:
   1. make a false or misleading statement; or
   2. fail to meet the requirements of the Act, regulations and rules; and
2. there are special circumstances (other than financial hardship alone); and
3. the NDIA is satisfied that waiving the debt is more appropriate than writing it off.

If the NDIA decides not to waive the debt or write it off, a person may appeal the decision within 3 months using this internal review form and, failing that, appeal it to the new Administrative Review Tribunal.

Who does the debt belong to?

National Legal Aid in a submission to the Senate Inquiry said that it wasn’t clear how the NDIA would decide who a debt belongs to – a participant or provider. For example, for plan managed participants, would the debt go to a participant, to the provider who provided the support, or the plan manager who processes it? This detail remains unclear.

Conclusion

Compliance activity is likely to ramp up in the near future, particularly for providers. Two weeks ago, the NDIA advertised for 8 Director-level positions, whose job titles include Director of ‘Digital Forensics’ and Director of ‘Scheme Debt’. Among other tasks, the division will focus on “Scalable responses, targeted at specific integrity vulnerabilities and cohorts, to address known and emerging integrity and fraud matters”.

There’s good reason the government should progress their compliance regime thoughtfully and collaboratively in this current context. In a recent press release, PWDA expressed concern that participants are not yet informed about what they can and can’t buy. I’ve spoken with providers in the last few weeks who’ve felt similarly.

Obviously, fraud is a serious issue and there needs to be checks on NDIS spending. But, as the Robodebt Royal Commission forensically uncovered, governments raising debts against people can have serious consequences. A flourishing NDIS needs a confident market, consistent rules, and clear review rights when things go wrong.

If you want buy something to cure your compliance anxiety, come discuss the nitty gritty with me and Rob Wooley in a workshop called The New NDIS Law: Changes to Debt and Spending Compliance Powers. We’ll explore how providers can protect themselves and stay on the right side of compliance law!

Compliance powers aren’t the only changes to the NDIS. Check out DSC’s New NDIS Law: What Providers Need to know.

Resources

If you or someone you know receives a debt, contact advocacy or legal aid here to see if you’re eligible for support.

NDIA has a hotline which people can call for information on the changes. You can contact the National Contact Centre on 1800 800 110. Press 1 for a dedicated hotline on legislation changes.

Check out the NDIS “in list” and “out list” and the NDIA’s FAQ’s to stay on the right side of the law.

CRU are running a free session on changes to the NDIS Act here.

Read Rick Morton’s stunning book Mean Streak if you need precautionary parables about mass government debt-raising.

Debts can be serious for people already in distress. If you or someone you know needs support, contact Lifeline on 13 11 14 or access a suicide callback service.

Disclaimer

I’m not a lawyer. This is not legal advice and should not be relied on as legal advice. Do seek out legal services for information about how this new rule relates to your situation here.