Scheme Sustainability: Beyond the cost

If you work in the NDIS sector and happen not to live under a rock, chances are you’ve encountered some chatter about Scheme sustainability. With the change in government, the sustainability question might lose some prominence, but we'd be kidding ourselves if we think it’s going to disappear altogether. 

In this article, we analyse the sustainability discourse to date and explore where the gaps are. Where is the discussion about the financial benefits of the Scheme? And why are costs even rising in the first place?

Sustainability is about so much more than what we have been led us to believe. If we're going to do the Scheme justice, it's time we started talking about the whole picture, not just the price tag.

The conversation so far

Most people agree that NDIS costs are rising and are expected to continue to rise. Last year, the NDIA’s Scheme Actuary published a report saying the Scheme would cost $41bn by 2024-25. That’s $10bn more than the Productivity Commission estimated in 2017. The NDIA then engaged the actuarial consulting firm Taylor Fry to re-run the sums using the NDIA’s data. Taylor Fry found the NDIA’s estimates on costs were rigorous and perhaps even an underestimate.

There have been plenty of reports on NDIS sustainability. Should you be looking for bedtime reading, here are the links:

o   Productivity Commission Report 2011

o   Productivity Commission Report 2017

o   NDIA Annual Financial Sustainability Report (AFSR) interim Report July 2021

o   NDIA AFSR Report 2020-21

o   Taylor Fry Independent Actuarial Report 25 November 2021

o   Per Capita Report 21 November 2021

o   Joint Standing Committee Report into Scheme forecasting 22 March 2022

Why are costs rising?

Part of the NDIA’s explanation for rising in costs is that more people – particularly younger people – are entering the Scheme. There have also been fewer people than expected leaving the Scheme for reasons other than death, particularly through the Early Intervention pathway. Additionally, payments have increased significantly over the past four years. And until last year, average plan sizes also rose.

But the Agency has still not explained the “why” behind these observations. Why are more people entering the Scheme than initially predicted? Why are fewer leaving? Why are plan utilisation and payments increasing, year on year? The sustainability reports are okay at answering the “what”, but the “why” is much harder.

Sector experts have connected rising Scheme costs to the government’s inattention to disabled people who aren’t eligible for the NDIS but still need support. Professor Bruce Bonyhady described the NDIS as an “oasis in the desert”. Outside the NDIS, there is an enormous shortage of programs providing disability-specific supports. This all-or-nothing approach drives up access requests to the Scheme, since for many people it’s the only way to meet their needs. This may also explain why people are afraid of exiting the Scheme.

There have also been claims the NDIS is run inefficiently or even mismanaged. The argument is that too much is spent on bureaucratic red tape and reviews, with too little dedicated to evidence-based early intervention, assistive animals, and assistive technology that would reduce Scheme costs over time. In other words, the status quo models of traditional supports and lack of innovation will end up costing us all.

A final explanation of the gap between predicted and actual costs is that the Productivity Commission might have simply underestimated the need.

 Most likely, more than one of these variables – and many unnamed factors – explain the Scheme’s rising costs. But until the “why” questions are tested with quality research, we won’t have answers.

 Why people care about the cost of the NDIS

Community groups have expressed concerns that, if spending continues to rise, the government might respond by capping the NDIS, tightening eligibility, implementing means testing, or doing something else that goes beyond the original intent of the Scheme. We’ve learnt from the past few years that politicians are likely to take action to cut costs. Take the highly unpopular and stunningly protested Independent Assessments, for example. 

While the government dropped those reforms, the NDIA did make significant – and unannounced – changes to the Scheme. There has been a reduction in plan budgets over the past year, for example. We also observed significant changes in internal and external reviews, signalling cost-saving measures behind the scenes. All of this has happened without any publicly announced change in policy.

As a community, we also have to keep an eye on rising costs to explore what they signify – be that an unmet need in the community or a lack of focus on early investment.

Measuring the benefits

In addition, little is known about the Scheme’s economic benefits. The discussions about financial sustainability have skewed heavily toward the cost side of the equation while completely overlooking any benefits. Indeed, after reading the five reports commissioned by government on Scheme sustainability, I cannot recite any of the economic benefits. 

Late last year, economists at Per Capita started to explore the economic benefits in a report. For every $1 spent on the NDIS, Per Capita found that the economy sees a $2.25 return. These benefits play through carers and through disabled people (re)entering the workforce. Additionally, because of the NDIS, small business, care providers, therapies, and assistive technologies sectors have been stimulated.

Likewise, underinvestment in the Scheme also comes with major financial impacts on the wider economy. Per Capita asks whether we can we afford not to invest in the NDIS.

While Per Capita’s analysis is a fantastic start, much more research is needed. Its study did not measure whether the NDIS reduces incarceration or hospitalisation. And the data we have on employment outcomes is still shaky. In 2018, only 27% of people with “severe and profound” disability were participating in formal labour, compared with 76.5% of non-disabled people, according to an ABS report. To our knowledge, whether the NDIS is on track to add the predicted $8bn to GDP through employment of disabled people by 2050 has not yet been modelled. And if we aren’t on track, what kind of investment is needed to get us there? 

And there’s much more we could be measuring. Opportunities exist for think tanks, advocacy bodies, universities, and service providers to safely and consensually collect data and report on the benefits of the NDIS.

Public perception

It's not just costs and benefits that matter; public perception also shapes the sustainability of the Scheme. The Productivity Commission put it this way: “While the NDIS is sometimes described as an ‘uncapped scheme’, the ultimate cap – and test of financial sustainability – is taxpayers’ continuing willingness to pay for it” (2017:82). 

While support for the NDIS is high, we know little about public support for the NDIS at different levels of cost and implementation. We don’t know, for example, whether the community would be willing to pay for the NDIS at $30bn or $40bn per year. Would we – as contributors to the Scheme – agree to a higher Medicare levy if the NDIS were extended to 859,328 people, as the NDIA projects? What about to people over 65? Without this data, it’s hard to know the value everyday Australians place on the NDIS.

Is the economic chat the only chat to be having?

Of course, economic benefits are only part of the value of the NDIS. We also must look at whether the NDIS is improving people’s lives and meeting Australia’s obligations under the UNCRPD. In other words, we need to talk about the human value of the NDIS – not just the financial one.

In its quarterly reports, the NDIA does some of the essential work of reporting on outcomes. However, this information by itself it is not enough to obtain an accurate sense of how the Scheme is performing and what needs to be done differently.

Most people in the Scheme place the human value of the NDIS above all else. The late Stella Young, a fearsome advocate for the NDIS, put it this way in 2012:

We don’t think about [the NDIS] in terms of money. Disabled people in this country, our families and carers … think about it in terms of how many showers we’re allowed to have per week, whether or not we have wheelchairs that work, whether or not we can leave our houses ‘cos we have the basic equipment we need. … There are people whose lives are not sustainable without an NDIS. (Q&A 2012)

Now’s the time to come up with a new sustainability story. DSC is once again hosting Where to From Here: The National Conference on the Future of the NDIS, which is an opportunity for disabled people, the architects, the artists, the agitators, the Agency, advocates, providers, and the public to craft a new narrative. We’d love your help with this.