NDIS Reform: It’s the Most Wonderful Time of the Year!

Santa came early for the Commonwealth Government this year in the form of the widely publicised National Cabinet agreement to split the cost of disability services outside the NDIS (referred to as foundational supports) in return for additional GST funding.

The next day, the equally well-publicised report of the NDIS Review Panel was published. The report is to be commended for:

• Acknowledging that the NDIS has transformed the lives of hundreds of thousands of Australians living with disability
• Focusing on reforms to the Scheme to improve outcomes for people with disability rather than reforms simply to save money
• Recommending a return to the original NDIS design based on the social model of disability, supporting Australians with the highest level of support needs, and community-based disability and mainstream services outside the NDIS supporting most Australians with disability.

A key recommendation is to move away from medical diagnoses to determine eligibility for the NDIS and instead move to tailored assessments based on transparent methods for determining functional capacity. Participants would receive funding on a flexible budget rather than line-by-line as at present.

For children with autism and developmental delay this is intended to result in more being provided with supports in community settings and less with individual supports provided through the NDIS - hence the importance of the National Cabinet agreement. This outcome is in line with the recommendations of Actuaries Institute's Dialogue Paper Providing Better Support for Children with Autism and Developmental Delay.

Other recommendations include:

• investing in foundational supports to bring fairness, balance and sustainability to the ecosystem supporting people with disability
• replacing Plan Managers with 'Navigators' who will be able to connect people with disability to services inside and outside the NDIS
• developing a new approach to NDIS supports for psychosocial disability
• delivering a diverse and innovative range of inclusive housing and living supports
• investing in digital infrastructure for the NDIS to strengthen market functioning and Scheme integrity
• strengthening market monitoring and responses to challenges in coordinating the NDIS market
• improving access to supports for First Nations participants; and
• measuring what matters, building an evidence base of what works, and creating a learning system.

These recommendations are in line with Actuaries Institute's submission to the NDIS Review.

Importantly, the report recommends a five-year transition period to the new arrangements and that changes to access and budget-setting processes for children and young people should only be implemented when widespread foundational supports are in place.

The NDIS Review Report doesn't contain any costings or comment on financial sustainability other than to acknowledge,

The Report also comments,

Less well-publicised was that the Government finally released the Scheme Actuary's Annual Financial Sustainability Report 2022-23 which had been blocked by Minister Shorten on the grounds it was about to release the NDIS Review Report. ^[1] The Report takes account of the initiatives to achieve the 8 per cent medium-term growth target referred to above but does not incorporate the recommendations from the NDIS Review because these were not available at the time and subject to policy decisions to be made by National Cabinet.

In his independent peer review the Australian Government Actuary (AGA) comments that the projected growth in costs, even allowing for the 2023 Commonwealth Budget initiatives, is above the target in the medium term i.e., the Budget initiatives in themselves are not sufficient to reach the growth moderation target. The AGA also comments that the baseline projection (the projection before allowance for the 2023 Commonwealth Budget initiatives) is more likely to understate, rather than overstate, future costs, and that there is uncertainty over the realisation of the cost savings from the initiatives. It is worth noting that the Mid-Year Economic and Fiscal Outlook (MYEFO) includes an additional $492 million in 2024-25 to ensure the NDIA can continue to support NDIS participants.

The NDIS Review recommendations, whilst un-costed (at least publicly), will require substantial legislative change, co-design with people with disability, and financial investment over the next five years of transition. This includes investment in infrastructure, including IT, and a rapid growth in the disability workforce (e.g. Navigators, support services and foundational supports) that will be challenging, and which may slow the pace of change. Thus there is a significant risk of above expected growth in NDIS costs. However, once achieved the reforms should - in theory, at least - result in cost savings in the NDIS.

Let's hope the National Cabinet can work together to achieve these significant changes whilst maintaining the 8 per cent medium-term growth target. If they do it truly will be the most wonderful time of the year!

References 

^[1] Read, M (2023, November 2). Labor keeps NDIS costs secret as chief actuary warns of cost blowouts. Australian Financial Review. Retrieved from https://www.afr.com/politics/labor-keeps-ndis-costs-secret-as-chief-actuary-warns-of-blowouts-20231101-p5egka