Draft report

• Productivity Commission

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02 March 2011The current disability support system is underfunded, unfair, fragmented, and inefficient, and gives people with a disability little choice and no certainty of access to appropriate supports, according to this report.This draft report, released on 28 February 2011 states that:

 

• There should be a new national scheme - the National Disability Insurance Scheme (NDIS) - that provides insurance cover for all Australians in the event of significant disability. While Australians would pay more taxes (or governments would cut other spending), people would know that if they or their family acquired a significant disability, they would have a properly financed and cohesive system to support them.

 

• The NDIS would fund long-term high quality care and support (but not income replacement). Around 360 000 people would receive scheme funding.

 

• Beyond that main function (and the biggest source of its costs), the NDIS would have several other important roles, including mustering community resources, providing information to people, quality assurance, diffusion of best practice among providers, and breaking down stereotypes.

 

• The needs of people with a disability and their carers would be assessed rigorously by NDIS-appointed local assessors, with careful management to avoid assessment 'softness' or 'hardness'. Assessment would lead to individualised support packages. Strong governance would be necessary to contain costs and ensure efficiency.

 

• The agency overseeing the NDIS - the National Disability Insurance Agency - would be a federal agency created by, and reporting to, all Australian governments. It would have strong governance arrangements, with an independent board, an advisory council of key stakeholders, clear guidelines to ensure a sustainable scheme and with legislation that protected the scheme from political influences.

 

• Support packages would be portable across state and territory borders, as would assessments of need.

 

• People would have much more choice in the NDIS. Based on their needs assessment and their individualised support package, they would be able to:

   

  • choose their own service providers

   

  • ask a disability support organisation (an intermediary) to assemble the best package on their behalf

   

  • cash out their funding allocation and direct the funding to areas of need they think are most important. There would have to be some controls over the latter to ensure probity and good outcomes. People would need support to adopt this option and, given overseas experience, it would take some time for many to use it.

 

• The NDIS would cover the same range of supports currently provided by specialist providers, but would give people more opportunities to choose mainstream services and would encourage the development of innovative approaches to support.

 

• In 2009-10, the Australian Government provided funding to the disability sector of around $1.7 billion, while state and territory governments provided funding of around $4.5 billion - or a total of $6.2 billion.

 

• The Commission's preliminary estimates suggest that the amount needed to provide people with the necessary supports would be an additional $6.3 billion, roughly equal to current funding. Accordingly, the real cost of the NDIS would be around $6.3 billion per annum. That could be funded through a combination of cuts in existing lower-priority expenditure and tax increases.

 

• Current funding for disability comes from two levels of governments, with an annual budget cycle - making it hard to give people with disabilities any certainty that they will get reasonable care and support over the long-run

   

  • currently, supports might be good one year, but insufficient the next.

 

• The Commission is proposing that the Australian Government take responsibility for funding the entire needs of the NDIS. This is because the Australian Government can raise taxes more sustainably and with fewer efficiency losses than state and territory governments.

 

• State and territory governments should offset the Australia-wide tax implications of the NDIS by either:
  

   

  1. reducing state and territory taxes by the amount of own-state revenue they currently provide to disability services or

   

  2. by transferring that revenue to the Australian Government.

   

  • The Commission prefers option (a) because it leads to a more efficient way of financing the NDIS, with greater certainty of long-run funding, and with a no greater level of Australia-wide taxes than other options. Compared with most of the alternatives, it would also have a lower risk that jurisdictions would not meet their ongoing commitments.

 

• To finance the NDIS, the Australian Government should direct payments from consolidated revenue into a 'National Disability Insurance Premium Fund', using an agreed formula entrenched in legislation. A tax levy would be a second-best option.

 

• The scheme would commence in early 2014, commencing with a full scale rollout in a particular region in Australia. That would allow fine-tuning of the scheme, while providing high quality services to many thousands of people. In successive years, the scheme would:

   

  • extend to all Australia in 2015

   

  • progressively expand to cover all relevant people with a disability, commencing with all new cases of significant disability and some of the groups most disadvantaged by current arrangements.

A separate scheme is needed for people requiring lifetime care and support for catastrophic injuries - such as major brain or spinal cord injuries. Currently, many Australians get poor care and support when they experience such injuries because they cannot find an at-fault party to sue. A no-fault national injury insurance scheme (NIIS), comprising a federation of individual state and territory schemes, would provide fully-funded care and support for all cases of catastrophic injury. It would draw on the best schemes currently operating around Australia. State and territory governments would be the major driver of this national reform.