NDIS costs: Productivity Commission costs position paper, including NIIS comment

Released today is the Productivity Commission’s NDIS Costs position paper. It sets out preliminary conclusions and seeks feedback by 12 July 2017.

Key points include:

  • NDIS costs are broadly on track with the NDIA’s long-term modelling.
  • There are some emerging cost pressures, such as higher numbers of children entering the scheme.
  • The rollout speed has resulted in the NDIA focusing too much on meeting participant intake estimates and not enough on planning processes, supporting infrastructure and market development.
  • Some disability supports are not being provided because of unclear boundaries about the responsibilities of the different levels of government.
  • A significant challenge is growing the disability care workforce required to deliver the scheme — it is estimated that 1 in 5 new jobs created in Australia over the next few years will need to be in the disability care sector. Present policy settings are unlikely to see enough providers and workers as the scheme rolls out. Some emerging shortages need to be mitigated by better price monitoring and regulation; better tailored responses to thin markets; formal and informal carers allowed to provide more paid care; and a targeted approach to skilled migration.

Page 208  – 210 of the report speaks of the interface with the proposed National Injury Insurance Scheme. The Commission is seeking feedback on a mechanism to ensure that the States and Territories bear the cost of participants who were intended to be covered by the National Injury Insurance Scheme. That part of the paper includes:

The NIIS, as proposed by the Commission, was to operate as a federation of individual state-based no-fault insurance schemes.

Implementation of the NIIS is overseen by the Australian Treasury and has been undertaken across four streams — motor vehicle accidents, workplace accidents, medical treatment injuries and general accidents (occurring in the home or community).

…Progress on the other two streams, medical accidents and general accidents, has been slower. A discussion paper was released in 2015 for the medical treatment injuries stream (Australian Treasury 2016c); however, negotiations for the general accidents stream have not commenced. The DSS (sub, 146, p. 25) noted that over the short to medium term, the medical and general streams may not be implemented, with a number of implementation challenges identified for the medical stream. As there is no agreement in place by the states and territories to commit to the funding for, or establishment of, the medical and general accident streams, anyone who acquires a catastrophic injury from a medical or general accident will receive supports through the NDIS. This will have a direct impact on NDIS costs.

…The number of people entering the NDIS, who would otherwise be covered by the medical or general accident streams of the NIIS in any one year is expected to be relatively small across both streams the Commission in 2011 estimated there to be around 400 people. But over time, as new people enter each year, there is a cumulative effect. To illustrate, modelling undertaken by the NDIA suggests that the cost to the NDIS of the medical and general schemes not operating would amount to about $23 million in 2018-19, but would increase to about $226 million in 2025-26 and to around $1.3 billion in 2040-41.

…Because the states and territories have greater control over implementing risk reducing  programs (and therefore, indirectly, the costs of the NIIS), they should bear the costs of the NIIS if it remains only partially rolled out for an extended period.


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