The hidden costs of Australia’s National Disability Insurance Scheme

You do not have to own a building to get naming rights. You just have to be the biggest tenant.

So it is with DisabilityCare, the national disability insurance scheme. The Prime Minister wants naming rights so she promises a levy, starting next year, to part fund it. And Tony Abbott was not about to give it to her, so he supported the levy.

Australia now has a prospectively partially funded trial national disability insurance scheme. But parents, charities and state governments built their schemes over generations. The commonwealth government could have taken WA Premier Colin Barnett‘s advice, surely the nation’s most articulate leader, and simply enhanced each state’s disability system. No, the commonwealth wanted naming rights. It believes it is the biggest tenant.

Whether the tenant is paying enough rent for naming rights is questionable.

The scheme is partially funded by a commonwealth levy on a levy, Medicare+DisabilityCare. Neither levy covers anywhere near the intended scheme it is meant to fund. Abbott has sensibly indicated that he will abolish the levy as and when the budget is repaired. In fact, he should insist on a sunset clause on the new levy, say three years.

It would be prudent to abolish both the Medicare levy and the DisabilityCare levy in time and fund these schemes from consolidated revenue. He should also withdraw his Paid Parental Leave Scheme levy. Enough with the levies!

Tacking on bits and pieces of taxation is a sure sign that a government has not managed its budget. Rather than abandon inessential programs, governments keep adding new ones, and rob from essential ones, hoping no one will notice.

The big scheme that has been let slide is SecurityCare, aka the Australian Defence Force, which is now in deep disrepair.

The proportion of the whole that the DisabilityCare levy will fund depends on the number of recipients. The scheme is meant to fund long-term care and support (but not income replacement) for people with “significant” disabilities.

The government has agreed to fund the Productivity Commission recommended number of 411,250 people.

Of these, 329,510 people would have significantly reduced functioning:

• 222,310 require daily assistance with core activities;

• 50,320 with self-management limitations;

• 56,880 with significant and enduring psychiatric disability.

In addition, a further 81,740 would receive early intervention support.

The commission did not use the “profound” and “severe” disability categories as used by Australian Bureau of Statistics, but the profoundly disabled was a starting point in arriving at the commission figure. Others were ruled in or out on the basis of the permanence of the disability. Taxpayers should be aware that, in addition to profoundly disabled, the ABS estimates that there are 350,000 who have “severe core activity limitation”, many of whom have permanent conditions. This means that many are knocking on the door of the scheme. The pressure in future to include some of them will be immense.

The commission estimated that a further $6.5 billion (net) would be required in addition to the $7.1bn already spent annually on people with a disability – a 90 per cent increase. The Australian government actuary, however, has reworked the figures and suggests $10bn would be required, a 140 per cent increase.

The Prime Minister has promised that every dollar raised by the levy will go directly to fund DisabilityCare Australia. So what? It will be raided in time, just like the Higher Education Fund and the major infrastructure Building Australia Fund. Thank goodness there was no sovereign wealth fund to raid.

The pressure to lobby for the next group of needy is infectious. And some strange characters get in on the act. For example, why did the Australian Bureau of Statistics make this statement? “Just under one in five Australians had a disability. This represents approximately 4.0 million people.” What is it with the bureau? Does it need a headline? Disability rises with age, so the one in five figure conflates the severely disabled with those who require no special assistance or are the normal part of ageing. The main disabling conditions were back problems and arthritis. Welcome to my world.

Governments have failed to keep the number of Disability Support Pension claimants in check. The numbers have almost doubled in the past 20 years, and yet the rate of occupational injuries and disease has decreased dramatically from 21 per 1000 to 13 per 1000 since 1997. The medicos who wave through the pensioner may wave through the disabled.

Proponents who remind me that DisabilityCare will only cost a dollar per day extra need reminding that I would love a dollar a day for every politician who told me their scheme would only cost a dollar a day extra. Naming rights do not come cheap.

Related articles

• Australia: Asylum seekers children to stay on Manus Island despite doctor’s health warnings (craighill.net)
• Qld signs up for federal disability scheme (news.theage.com.au)
• Gillard says NDIS levy should be permanent (abc.net.au)
• Labor to take disability tax rise to poll (news.theage.com.au)
• Medicare levy rise funds disability plan (bigpondnews.com)
• Victoria signs up to disability scheme (abc.net.au)
• Queensland signs up to DisabilityCare (abc.net.au)
• Another state signs up for disability care scheme (radionz.co.nz)
• Abbott says NDIS should include autism (bigpondnews.com)
• Gillard takes disability levy to polls (bigpondnews.com)
• July launch for NDIS in NSW Hunter region (news.com.au)