Financial reports show NDIS costs consistently overestimated

Posted 1 year ago by Alex Jacobs
Historical data shows NDIS costs had been overestimated by almost $15 billion [Source: iStock]
Historical data shows NDIS costs had been overestimated by almost $15 billion [Source: iStock]

As the National Disability Insurance Scheme (NDIS) edges closer to a projected cost of $50 billion per year, new figures released by the National Disability Insurance Agency (NDIA) reveal previous NDIS financial reports had overestimations of more than $15 billion over three years.

The historical data was released on Wednesday with several NDIS Annual Financial Stability reports made public for the first time.

This data showed that the former Government, who often said that the NDIS was “unsustainable”, had several three-year predictions that exceeded what the scheme would actually cost.

Some of the key three-year predictions that exaggerated eventual costs include:

  • 2013/14 figures overestimated the NDIS cost by $4.86 billion
  • 2014/15 figures overestimated cost by $6.31 billion
  • 2015/16 figures overestimated cost by $4.17 billion

With the Federal Government recently allocating $166.6 billion to the NDIS over the next four years, the historical data suggests future NDIS spending may come in under budget.

However, the latest Federal Budget projects annual growth of 14 percent, which means there are implications the NDIS will cost $50 billion per year by 2025/26.

Looking to the short and medium term, 2020/21 estimations project a cost of between $39 and $47.8 billion in 2024/25 and $53.2 to $74.2 billion for 2029/30.

The increased costs are partially associated with an above-anticipated number of participants joining the NDIS.

Previous Productivity Commission estimates sat around 600,000 participants by 2030, but updated figures point to 860,000 participants.

Speaking at a conference in Melbourne on Wednesday, NDIS Minister Bill Shorten says individual States and Territories will need to step up to help relieve the pressure, but he does not plan to change eligibility criteria to deny support opportunities.

“Put simply, the NDIS was never intended to be the only lifeboat in the ocean when it comes to the provision of disability services in this nation,” says Minister Shorten.

“People with disability are not to blame for the cost overruns.

“If some people here want me to just say we’re going to slash eligibility and we’re going to just cut all the packages across the board – I’m not your man.”

Instead, he will remain focused on waste and fraud, which is one area where cost-cutting will influence future estimations.

The recently launched NDIS review board, co-chaired by Professor Bruce Bonyhady AM and Lisa Paul AO PSM, will review the design, operation and sustainability of the NDIS to improve performance and trust.

Professor Bonyhady says future predictions have to be based on a clear understanding of the current effectiveness of NDIS expenditure.

“Until we understand exactly why the costs are higher than expected over the last couple of years, it’s very hard to make reliable predictions on what the future costs will be,” says Professor Bonyhady.

A fraud taskforce announced in the Federal Budget is also expected to recoup $291.5 million over the next four years. The taskforce will focus on fraud and non-compliance in the NDIS and will cost $126 million to establish, but should deliver savings of $165 million.