Australian economy to rely on cutting NDIS costs in half

Key points:

• Prime Minister Anthony Albanese announced an eight percent growth target for the National Disability Insurance Scheme by 2026 to curb ‘unsustainable’ costs

• The Intergenerational Report released August 24, 2023, outlined the future of Australia’s economy over the next 40 years, until 2062 – 2063

• The Report incorporated the NDIS Financial Sustainability Framework target into economic projections, although the details have yet to be finalised

The Intergenerational Report 2023, released by the Federal Treasury on August 24, offered Australians insight into national economic projections for the next 40 years.

Notably, the Report highlighted five central spending pressures, estimated to rise from one-third to half of all Government spending by 2062 – 2063: health, aged care, the NDIS, defence, and debt interest payments.

The reduced NDIS growth target, from 14 to eight percent, is expected to save $50 billion dollars over the following decade, down from an estimated $97 billion dollar cost to the 2023 – 2033 Budget.

In April, Prime Minister Anthony Albanese announced that the growth target for the NDIS would be set at eight percent by 2026, which the Report incorporated into projected Government expenditure.

The independent NDIS review panel spoke in Newcastle on August 22, to deliver a webinar on their key reform considerations to improve the Scheme, which cost $35.1 billion dollars in 2022 and currently supports more than 600,000 people nationwide. The final report from the independent NDIS Review Panel will be provided to Disability Reform Ministers in October of 2023.

The Intergenerational Report 2023 noted that without a Framework to meet the eight percent target and a period of Scheme moderation thereafter, spending could increase by 162.5 percent from the national gross domestic product projected by 2063.

“This illustrative scenario for no Framework could involve Australian Government NDIS payments growing to 6.3 percent of GDP in 2062 – ‘63, higher than projections of Australian Government spending on health,” the Report stated.

One of the original minds behind the NDIS — which was introduced in 2013 by then-Prime Minister Kevin Rudd — review panel co-chair Professor Bruce Bonyhady AM said that the Scheme had been treated like it were an endless resource.

“[…] The NDIS is not limitless and we all need to stay within the bounds of those limits,” Prof Bonyhady explained.

Professor Anthony Scott, director of the Centre for Health Economics at Monash Business School told the public not to panic about the Report, as there were still areas of improvement that had not been factored in.

“Many areas such as aged care and NDIS are undergoing reform at the moment, which will help to make them more sustainable into the future, and which are not reflected in forecasts in the report,” Professor Scott said.

What do you think about the big changes to NDIS funding? Let the team at Talking Disability know what you expect when recommendations are handed down in October.