The treasurer, Scott Morrison, has launched a review of the national disability insurance scheme by the Productivity Commission to consider the scheme’s costs and sustainability.
The review will also consider the role of other services in meeting disabled people’s needs, which critics are likely to seize upon as preparing the ground for a possible reduction in the scope of the groundbreaking funding system for disability support services.
Morrison launched the review on Friday, explaining in a statement that it would “inform the final design” of the NDIS including by “updating initial cost projections estimated ... and by providing advice on longer-term projections and overall sustainability issues”.
The commitment to a review in 2017 was part of a heads of agreement between the commonwealth, states and territories. The Productivity Commission will report within eight months.
The terms of reference include consideration of the sustainability of the scheme, jurisdictional capacity, cost pressures (including wage pressures), changes in the agreed escalation parameters and efficiencies that have been achieved in the scheme.
It will also assess “whether there has been any impact on mainstream services” from the introduction of NDIS trials and “the most appropriate levers to manage any potential cost overruns”.
The $22bn disability insurance scheme is currently being trialled in areas including the ACT, the Barwon region in Victoria, the Hunter area in New South Wales and trials for children in Tasmania and South Australia.
But the National Disability Insurance Agency has warned of the potential for cost overruns, as the Productivity Commission originally estimated an average cost of $34,969 but the average cost is actually more than $38,423 a person.
In September the finance department identified possible growth in the number and package costs of clients of the NDIS as one of a number of “significant downside risks” to the federal budget.
The terms of reference say the Productivity Commission should consider:
- commonwealth and state funding and governance arrangements for the NDIS, including financial contributions and risk-sharing
- the interaction with, and role of, other services in meeting reasonable and necessary support for people with severe and profound disability
- whether there are any issues with the scheme’s design, including the application of market and insurance principles, in ensuring the best possible outcomes for people with severe and profound disability.
Concerns have been raised about the NDIS including through a PwC study that reportedly found the scheme may not be ready for the 400,000 additional participants expected by 2019-20 when the scheme is fully operational.
Other reported problems have included estimating only half the number of children in South Australia would be eligible for autism services than is in fact the case.
