Over $2 billion (US$1.34 billion) of National Disability Insurance Scheme (NDIS) funding is not properly spent each year as a portion of program participants splurge on drugs, alcohol, luxury goods, and other unnecessary expenses.
During a budget estimate hearing on the night of June 3, NDIS Integrity Chief John Dardo revealed the degree of fraud and corruption within the system, as a significant number of program participants, along with dodgy plan managers and service providers, defrauded the scheme.
When individuals sign up for the scheme, they need to create a plan where they set out their goals and outline the support they need to pursue them.
If their plans are approved, program participants will receive funding to pay for the services they need.
However, not everyone who receives NDIS support would use the funding properly.
“There would be thousands of cases where participants are claiming things that are not consistent with their plan,” he said.
“Examples just in the last week [include] a $20,000 holiday, a $10,000 holiday. We had a participant that bought a car, brand new, $73,000.”
There was also a case where an individual who was on a $480,000 annual plan made a claim of $40,000 each month. However, his plan actually cost him $20,000 a month, and he used the $20,000 difference to pay off his mortgage and living costs.
While the NDIS managed to convince some participants to repay the money they wrongly spent, others were not willing to do so.
In addition, Mr. Dardo said some organised crime groups were encouraging participants to use NDIS money to buy drugs and alcohol.
He explained that there were many cases of plan managers who sold drugs such as heroin, cocaine, speed and ice to their clients.
Mr. Dardo gave the example of an NDIS participant who met their plan manager at an ATM where a service provider withdrew cash and gave that cash to the participant to buy illicit substances.
“These are not genuine providers, not people who should be in business, not people who should be allowed near government schemes of any kind,” he said.
“We need to exit them from all government services, not just the scheme. We need to exit them from Medicare and APRA [Australian Prudential Regulation Authority] and everything else that they’re involved with.”
Impossible to Prosecute All NDIS Fraud
While Mr. Dardo said more work needed to be done to get rid of fraud in the NDIS system, he said it was impossible to prosecute all the fraud as it would overwhelm the court system.“There are weaknesses in the design of the system that need to be addressed. We just cannot prosecute or audit our way out of this,” he said.
To address the issue, the integrity chief proposed the government introduce new laws aiming to prevent dodgy providers from scamming participants.
In April, the government revealed that more than 100 cases of alleged fraud in the NDIS had gone before the courts following thousands of tip-offs.
Currently, the NDIS is one of the top expenses in the federal budget, and the government is struggling to control the ballooning cost of the scheme.
At the same time, NDIS payments were projected to increase by $15.9 billion over four years from 2024-25 to 2027-28.
While the government has come up with a reform plan to offset the projected increase, NDIS payments were still forecasted to grow by $14.4 billion during the period.
