A confronting graph lays bare the staggering multibillion-dollar gap between the expected cost of the NDIS and its current reality, as an expert reveals how it spiralled out of control.
The chart by Tarric Brooker, drawn from ABC analysis, showed what the NDIS was expected to cost the taxpayer based on forecasting in the 2015-16 budget, and what the government ended up spending.
If the scheme had stayed in line with expectations, then last year it should have cost $22.4 billion.
Instead, it ended up slugging the taxpayer with a bill of almost $53.8 billion as participant numbers surged and fraud ran rampant.
Budget papers show this is expected to blow out to $56 billion next year, and will remain around that level each year until 2030.
In response to the crisis, the government will design a standardised, evidence-based assessment of functional capacity to determine scheme access.
“A big part of our savings package will restore the NDIS to its original intent and secure its future, so it grows in a sustainable way in line with programs like Medicare,” Treasurer Jim Chalmers “This difficult but necessary reform will save $37.8 billion over the forward estimates.”
Experts say the situation has spiralled out of control.
“It (the NDIS) was supposed to provide support for those with significant and permanent disabilities,” said Dr Mona Nikidehaghani, senior lecturer at the University of Wollongong, when asked how costs had skyrocketed.
“But over the years, states withdrew any support that they had, so every disability support came under the big umbrella of the NDIS.”
How did it get this bad?
The National Disability Insurance Scheme (NDIS) was designed to replace a fragmented and underfunded state-based system for Aussies with permanent disabilities.
Grassroots campaigns and a landmark 2011 Productivity Commission report helped it gain bipartisan support before the Gillard Labor Government passed the NDIS Act in 2013.
By 2020, the scheme was fully operational across the country after a massive, phased rollout.
It was supposed to be a moderately expensive social safety net, but it grew exponentially.
The NDIS was never meant to look after every single Australian with a disability; people with less severe disabilities were expected to continue using community and state services.
But when the scheme rolled out, state and territory governments saw an opportunity to balance their budgets, cutting funding to community programs.
And as people flooded the NDIS to get the support they couldn’t get anywhere else, particularly young children with developmental delays and autism, the costs soared.
Those children now make up roughly half of all participants.
“In a way, it became the only shop for disability supports,” Dr Nikidehaghani said.
“Now, many people are coming into the NDIS because that’s the only major provider of support — states and territories don’t have much funding.”
She said one of the core components of the NDIS – early intervention, or targeting children early so they don’t become reliant on support long-term – had further boosted participant numbers without clear evidence the approach was reducing future reliance on the scheme.
“We don’t really see the outcome, so we don’t know if that early intervention is helpful for them to go out of the NDIS.”
What are we doing about it?
Originally, the NDIS was supposed to be funded roughly 50/50 between the states and the Commonwealth.
But the agreements were set up so that state contributions were capped at a 4 per cent growth rate per year.
Because scheme costs were growing at over 20 per cent a year, the federal government was forced to pay for almost all of the excess.
That tension reached a boiling point during the 2023 NDIS Independent Review.
Later that year, the National Cabinet struck a tense deal that is currently reshaping the system.
The federal government legislated a target to cap NDIS growth at 8 per cent per year (currently, it’s growing at around 10 per cent), while the states agreed to build programs outside the NDIS for people with lower-level needs.
These programs, termed “Foundational Supports,” will have their costs split 50/50 between the states and the federal government.
The flagship first phase is a $4 billion program called “Thriving Kids,” designed to provide community-based support for children aged eight and under with developmental delays or autism who have low-to-moderate needs.
These services will begin rolling out in October, and must be fully operational by January 2028.
So the states will be taking at least some of the burden off the scheme, but there are other problems with it as well.
Over-charging, ineligible payments, organised crime and fraud are estimated to comprise up to 10 per cent of payments, or $4.6 billion per year.
“Any large scheme becomes very attractive for fraudulent activities,” Dr Nikidehaghani said. “Criminals move from one large scheme to another; wherever they see a big pile of money.”
What the NDIS became – a system operating on “market logic” without enough checks and balances around the services being delivered – only worsened the fraud and over-servicing problem, she said.
“We didn’t have systems to match the services provided. There was no verification for the participant to say, ‘Yes, I actually did receive this service, or this exact type of service, or these exact hours.’ So providers could claim on their behalf.
“It has so many tentacles, and it’s passed to the market to deliver a service. And for providers, it’s a business, and any business is after profit maximisation.”
The government is attempting a crackdown on fraud in the scheme, with NDIS Minister Mark Butler announcing reforms last month as part of a major overhaul.
Providers will be moved to a new digital system, enabling the National Disability Insurance Agency (NDIA) to have visibility over claims and pay them directly, addressing the current issue where evidence is missing for 90 per cent of claims.
Eligibility will also be tightened, with about 160,000 of the roughly 760,000 people on the scheme set to lose access.
As far as Tuesday’s budget, Dr Nikidehaghani hoped to see a focus on ensuring provider integrity and oversight.
“That is something that’s tangible, and would probably lead to more control and cost management,” she said.
“If we can invest in systems that would basically minimise opportunity for criminal activity, that would have a long-lasting impact.”
As for the tightening of eligibility criteria, she wanted to see a “clear indication of who would actually provide the support” for the 160,000 people who will lose NDIS access, so they aren’t simply turned away with no other options.
“These participants still need the support, so who will actually help them?”
