Submission 161 National Disability Insurance Agency (ndia) National Disability Insurance Scheme (ndis) Costs Commissioned study

Question 57

What are the implications of the current risk sharing arrangements? Do they encourage either cost shifting or overruns? What, if any, improvements could be made to the current risk sharing arrangements?

The NDIS is a component of the National Disability Strategy. There is the risk that States withdraw funding from mainstream services to support people with a disability. Withdrawals in the areas of health, education, transport, justice and housing, could result in substantial risk to the overall cost of the NDIS. Greater focus and accountability across the National Disability Strategy is required to avoid this potential cost-shifting.

In addition, the costing of the NDIS assumes roll-out of the National Injury Insurance Scheme (NIIS), which supports people with serious injury (across motor vehicle accidents, worker’s compensation, general injury and medical misadventure). States and Territories have worker’s compensation schemes and no-fault schemes for people seriously injured in motor vehicle accidents however timing for implementation of a NIIS for general injury and medical misadventure is unclear. Without the NIIS in place, further cost-pressure will be placed on the NDIS.

Lastly, a concern the NDIA has experienced with the current risk sharing arrangements agreed by governments is in relation to in-kind supports. In-kind is higher than the notional prices, and at present the States and Territories do not carry the financial risk associated with resulting higher package costs.

The broader risk is that the Commonwealth bears a disproportionate financial burden in relation to financial sustainability, and that the NDIS is covering a broader range of supports, which could result in lower overall supports for people with a disability (across all portfolios).

Question 58

How is the 3.5 per cent increase in a state or territory’s contribution to the full scheme calculated? Is this reasonable? Will it skew the balance of the funding over time? If so, what are the implications? Is there a better way to index contributions?

The 3.5 per cent increase is the subject of agreements between Governments, and the NDIA understands that the DSS submission will cover this issue. The NDIA can observe that wage inflation and the Equal Remuneration Order (ERO) are likely to result in an increase above 3.5 per cent in the short-term, which will result in a skewing of the contributions. Longer-term assumptions should be set considering wage inflation levels, population growth rates, and efficient prices.

Question 59

How will Western Australia’s agreement with the Commonwealth Government affect scheme costs?

The NDIA is not yet in a position to assess the impact of the bilateral agreement between Western Australia and the Commonwealth on NDIS costs.

Question 60

Is there a better way of paying for the NDIS? For example, would it be better to fully fund the NDIS out of general revenue?

This is a question for governments to consider and decide.

Question 61

How should the financial sustainability of the NDIS be defined and measured?

The NDIA is committed to delivering the NDIS in a way that:

Promotes the objectives of increasing participant independence and economic and social participation; and

Is within the funding envelope set by governments in the bilateral agreements.

Financial sustainability is delivered by meeting the intent of the Scheme whereby:

The Scheme is successful on the balance of objective measures and projections of economic & social participation and independence for participants;

Participant outcomes are being achieved and they are receiving sufficient reasonable and necessary support to achieve these outcomes; and

The cost is and will continue to be affordable, under control, and represents value for money.

The NDIS Act and Rules outline the requirement for the Scheme Actuary to produce an annual financial sustainability report to assist with measuring and monitoring financial sustainability. Specifically section 180B(1) of the NDIS Act:

The scheme actuary must do all of the following each time an annual report is being prepared by the Board members under section 46 of the Public Governance, Performance and Accountability Act 2013:

1. 
   assess:
   
   1. 
      the financial sustainability of the National Disability Insurance Scheme; and
      
   2. 
      risks to that sustainability; and
      
   3. 
      on the basis of information held by the Agency, any trends in provision of supports to people with disability
      
2. 
   consider the causes of those risks and trends;
   
3. 
   make estimates of future expenditure of the National Disability Insurance Scheme;
   
4. 
   prepare a report of that assessment, consideration and estimation;
   
5. 
   prepare a summary of that report that includes the estimates described in paragraph (c).
   

The framework for monitoring financial sustainability used by the Scheme Actuary includes continuous monitoring and evaluation of participant outcomes and costs.

Specifically, the framework involves collecting data on the number of participants, the characteristics of these participants (to allow analysis of reference groups), the outcomes for these participants, and the cost of supports provided to participants. This allows a detailed understanding of deviations between actual and expected experience and hence identification of cost drivers. This information can then be used by the NDIA Board and management to implement any changes required to continue to ensure the NDIS remains financially sustainable.