'What has happened?': Sudden surge in NDIS cost predictions

NDIS Minister Linda Reynolds last week sounded warnings about the scheme's fast rising costs. Picture: Dion Georgopoulos
NDIS Minister Linda Reynolds last week sounded warnings about the scheme's fast rising costs. Picture: Dion Georgopoulos

The annual cost of the National Disability Insurance scheme is set to nudge $30 billion in the next three years - massively above budget forecasts made just seven months ago.

However the revised projections are not significantly higher than the Productivity Commission's estimates, casting doubt over the federal government's claims that the scheme's costs are ballooning well beyond expectations.

Critics are now accusing the government of raising alarm about cost blowouts as a part of a "scare campaign" to push through its controversial changes to the scheme.

As foreshadowed last week by Prime Minister Scott Morrison, Tuesday's federal budget confirmed the projected costs for NDIS participants' plans had blown out substantially from what was predicted in the October budget.

The budget allocated an extra $13.2 billion to the scheme across the next four years.

The scheme is now forecast to cost $26.4 billion next financial year, more than $2.5 billion above what was predicted seven months ago.

Participant costs are now predicted to grow to $29.4 billion in 2023-24 - some $5 billion above the most recent forecast.

The scheme's cost is forecast to reach $31.8 billion in 2024-25.

Greens disability spokesman Jordon Steele-John called for answers on why the cost projections had changed so drastically since October. Picture: Sitthixay Ditthavong

Greens disability spokesman Jordon Steele-John called for answers on why the cost projections had changed so drastically since October. Picture: Sitthixay Ditthavong

Mr Morrison said the scheme's cost were growing "more than was ever contemplated or expected", driven by a near 50 per cent increase in payments per participants between 2017 and 2020.

The scheme is soon expected to support 530,000 participants, about 55,000 more than had been anticipated.

In a statement issued after the budget was handed down, Senator Reynolds echoed Mr Morrison's comments from last week.

"The success of the NDIS is remarkable - in fact it is a world first. Today, some 450,000 Australians are supported by the insurance scheme," she said.

"The scale and cost per participant is now on a trajectory well ahead of what was anticipated by its original design.

"Labor's original NDIS framework makes it inflexible and administratively burdensome to make hundreds of individual decisions for hundreds of thousands of participants every year."

Senator Reynolds said she would continue to discuss with the states and territories how it can work to "guarantee the affordability" and long-term sustainability of the scheme.

Senator Reynolds and Mr Morrison have repeatedly highlighted that the government's share of the scheme's cost are increasing, suggesting the Commonwealth could ask the states to take on more of the load.

The government's assertion that the NDIS' growth was unexpected has been called into question by disability groups, Labor and the Greens, who have pointed out that the Productivity Commission's major 2017 report forecast the scheme's cost would reach $30.6 billion in 2024-25 - about $1.2 billion less than what is now predicted.

The scheme's cost were predicted to rise to $40.9 billion by the end of this decade and up to $113.6 billion by the middle of the century, according to the commission's report.

The cost of the NDIS is increasing each quarter. Picture: Supplied

The cost of the NDIS is increasing each quarter. Picture: Supplied

Greens disability spokesman Jordon Steele-John called for answers on why the cost projections had changed so drastically since October, and why the Morrison government hadn't acknowledged that the scheme remained on track to meet the commission's forecast.

Senator Steele-John claimed the "cost-blowout" was part of a "fabricated scare tojustify ramming through robo-planning" - a term critics are using to describe independent assessments.

He also drew reference to the government's $4.6 billion underspend on the NDIS in 2018-19 which had helped bring the budget back into balance before the pandemic struck.

"The Greens told them at the time that the money had to stay in the scheme but instead they used it to create a budget surplus," he said.

"Now the Morrison government is claiming costs have blown out by more than $5 billion over the forward estimates since October last year."

People with Disability Australia president Samantha Connor accused the Morrison government of running a scare campaign about the scheme's costs, likening it to former NDIS minister Stuart Robert's rhetoric around participants using their funds to pay for sex workers.

"There has been a scare-campaign run, first it was about prostitutes and yachts and other un-evidenced things that didn't happen. And now it's about cost blowouts - that is not evidenced," she said.

Labor's NDIS spokesman Bill Shorten said the federal government was "catastrophising about scheme sustainability and hyping fictional cost blowouts".

"People with disability deserve better than rubbery figures, spooky music and silly parlour games from those at the helm of this vital national scheme," he said.

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This story 'What has happened?': Sudden surge in NDIS cost predictions first appeared on The Canberra Times.