National Cabinet - photo courtesy The Shot
A meeting of National Cabinet has taken two critical decisions about the future of the NDIS, establishing a new front for a vital debate over funding. The first was to restrict and limit the scheme; the second to seek more funding from the states. Most importantly, however, the decisions have endorsed Bill Shorten's new plan to re-vamp the scheme.
Shorten is now in the box-seat and the new scheme will take shape within his conceptual framework; nobody else's.
Late last Friday afternoon, Anthony Albanese made an admission and a promise.
Labelling the NDIS indefensible while it remained on its current trajectory, the PM insisted this would change. “In 10 years’ time, when you look at the budget framework, the current rate of growth is simply not sustainable.”
Instead the government now plans to save more than $60 billion over the next decade by halving the current growth rate of the National Disability Insurance Scheme (NDIS) within three years, and pushing it lower after that.
The government insists that the current growth rate of 13.8% is unsustainable. Although the scheme will remain demand-driven, new reforms are being introduced to reduce this to 8% by July 1, 2026. As a part of this the federal budget in May will spend $720 million on funding staff increases and reforms to drive down costs.
This - the key decision - will simply occur by edict: it will happen because it will happen. Savings will be found and the budget will bank savings of more than $60 billion over the coming decade.
The other fundamental change is that, although the Commonwealth's funding share will rise from the current 66% to 82% over the coming decade, the states and territories will stop cost-shifting onto the scheme. This means they will carry increased responsibility for funding services and equipment that were not originally intended to be part of the NDIS.
Conceding that unless such drastic measures were taken to rein in spending, Albanese noted that this was still double the original forecast growth rate of 4 per cent when the scheme was conceived a decade ago. He insisted even this growth rate would need to be pushed down further after 2026.
The other major change is that the states (and territories) have agreed to stop the cost-shifting services and equipment.This includes treatment for early childhood developmental problems including speech and hearing impediments, together with public hospital services and equipment. The Commonwealth’s total contribution will rise to $97 billion dollars, up from the current $35 billion, within a decade. This includes a rise to 82 per cent funding rather than the current 66 percent, because the states’ current contribution is capped at 4 per cent.
Although when it was in opposition Labor fought strongly against any attempt by Scott Morrison to rein in the NDIS, things have now changed. Instead of mocking his warnings about the unsustainability of the scheme the party has swiftly, but smoothly, backflipped. Although opposition NDIS spokesman Michael Sukkar claimed Labor had now confirmed what he called a pre-election lie, that the NDIS had "no sustainability issues”, all this means is that both major parties are now committed to restricting the scheme. Labor will find no opposition from this quarter to any restrictive changes it chooses to introduce.
The Financial Review provides perhaps the clearest take on the popular mood in its weekend editorial over the weekend. This insists the PM's admission the National Disability Insurance Scheme (NDIS) was "out of control" highlighted Labor's budgetary challenge. Although admitting the NDIS was created to support the disabled, the publication then insisted that expanded eligibility and scope creep have turned it into an unsustainable program driven by an "entitlement mentality".
The point about such claims of rorting is not whether they are true or not - the vital point is that this perception is being driven by Labor and sets the place for any future coming debate over funding.
In the Fin's words, "the NDIS explosion is crowding out other socially worthy spending areas that tackle disadvantage, and it is time to implement hard caps on individual disability budgets and the overall spend". Note the way that argument's been formulated, because this is particularly important and undercuts one of the most significant premises of the original scheme.
When it was introduced, the idea was that People with Disability would be supported. The cost of doing so was irrelevant. National Cabinet last Friday finally dispensed with that critical premise which underlay the entire NDIS. Funding for PwD will now compete directly with money to be spent on defence, education and health.
The economic requirement for a balanced budget will come first.
This means that even if Jim Chalmers does announce - as is highly likely - a return to a predicted surplus over the coming year, this will not mean the NDIS will expend. There is a real determination by government to restrict eligibility for the scheme, simply in order to keep its growth in check.
The argument Bill Shorten will push is that the NDIS has now become an unsustainable entitlement program crowding out other socially worthy spending. This means there is a critical need to limit future growth of the scheme. Change along the lines Shorten has outlined will allow the government to restore the budget to balance and eliminate the critical problem of an unlimited scheme.
Even if this was a key part of the fundamental premise of the NDIS when it was introduced by Shorten.
But back then he was an ambitious young minister on the way up. Things may seem very different today but there is one big difference. This time Shorten will win.