The financial arrangements for the National Disability Insurance Scheme (NDIS) are crucial to the successful implementation of the Scheme. The NDIS is jointly funded by the Commonwealth and the States and Territories. The DisabilityCare Australia (DCA) levy (0.5% of income) was introduced on 1 July 2014, when the NDIS itself was only being introduced at trial sites. Consequently, most of the levy is being accumulated in the early years of the NDIS to meet future commitments of the Commonwealth and the States and Territories. How long will the accumulated balances of the levy survive if they are used to fund NDIS expenses as they increase? This paper attempts to answer this key question for the Commonwealth Government portion of the NDIS’ finances.

Information sources are patchy, but the Commonwealth Budget Papers for various years provide base information. The estimates are complicated by impacts on a range of existing Commonwealth programs to support State and Territory disability support services and also services supported by the Commonwealth itself. Assumptions are unavoidable, and are fully set out with the rationale; the accuracy of the estimates depends on the assumptions. But the assumptions do not affect the overall picture that emerges.

The estimates show that the Commonwealth will have no net financing requirement in the years up to and including 2018-19. In these years, the balances from the Commonwealth’s share of the DCA levy will be substantial, reaching an estimated $6,568 million in 2016-17.

It is estimated that the Commonwealth will have a net financing requirement in 2019-20, the first year in which the NDIS will be fully rolled out. In that year, the requirement is estimated to be $2,023 million, and the Commonwealth share of the DCA Fund will be exhausted. In later years, based on annual overall NDIS expenses of $22 billion, the net Commonwealth financing requirement is estimated at $4,073 million, which represents 37% of the Commonwealth’s share of total NDIS expenses.

There has been discussion in the media about whether the expenses may exceed the estimates now being used. Rather than reacting to such possibilities long before there is any hard evidence during the rollout, it would be best to focus on effective planning to provide NDIS participants the reasonable and necessary supports they need as efficiently as possible, and provide full information on emerging costs as the experience is gathered. There is a substantial window to learn during the rollout, and to adjust policy and administrative settings in the interim.