States, Territories Agree to Pay More to Soften Ballooning NDIS Costs

The latest annual financial sustainability report projects the annual cost of the NDIS will hit $89.4 billion by 2032.

The National Disability Insurance Scheme NDIS logo is seen at the head office in Canberra, June 22, 2022. AAP Image/Mick Tsikas

With the cost of Australia’s National Disability Insurance Scheme (NDIS) growing at an unsustainable 14 percent a year, the federal government hopes to contain its growth to 8 percent.

That means the “contribution escalation rates” of state and territory governments will increase from 4 percent to be in line with the actual scheme’s growth, now capped at 8 percent.

The decision came out of a National Cabinet meeting on Dec. 6—a gathering of state and territory leaders with Prime Minister Anthony Albanese. The leaders also agreed to jointly design additional “foundational supports” for the NDIS.

The Commonwealth will pay the remainder of the scheme’s growth, starting from July 2028. Without the intervention, the cost of the NDIS could start to erode other parts of the federal budget.

The NDIS is a taxpayer-funded insurance scheme that funds services and equipment needs for disabled individuals in the country.

NDIS More Expensive Than Universal Healthcare Scheme

New projections put the cost of the NDIS at $5.7 billion over the three-year forward estimates, with almost 200 people joining the program each day and numbers outstripping projections released only months ago.

Currently, over 580,000 people receive some form of support through the scheme. The latest annual financial sustainability report, released last November, projects the annual cost of the NDIS will hit $89.4 billion (US$58.76 billion) in 2032, as participant numbers surge above 1 million.

Federal and state governments will spend $35.5 billion on the NDIS in 2022-23, which includes $34 billion in participant costs and the expense of running the National Disability Insurance Agency (NDIA), making the decade-old scheme more expensive than the decades-old universal healthcare service Medicare.

While the government admits the cost is growing too quickly, it denies it is considering changing eligibility criteria or reducing support levels.

Instead, it is looking at price limits set for different services claimed through the NDIS, which are the highest of all government schemes and can be more than three times the rate of Medicare rebates for the same services.

For example, dietitians, occupational therapists, physiotherapists, podiatrists, and speech pathologists can be paid up to $193.99 an hour on the NDIS, compared to the standard Medicare rebate of $56.00 for similar services.

GST to Remain the Same, Medicare to Receive More

The National Cabinet also reviewed Australia’s Goods and Services Tax (GST).

It has long been a point of contention for Western Australia that the mineral-rich state received far less a share of the tax than other jurisdictions, even leading to periodic calls for the state to secede from the Commonwealth.

National Cabinet agreed to extend the GST “no worse off guarantee” in its current form for three years from 2027/28.

This will ensure proceeds from the tax are shared fairly and equitably, providing funding certainty for states.

The former Coalition government struck the “no worse off” guarantee with the states in 2018 after a deal was made with Western Australia over the GST carve-up. The deal was due to expire in 2026/27.

Western Australia had agreed to surrender 30 percent of its GST to the other states, which its premier, Roger Cook, said had so far delivered over $13 billion to the eastern states.

The leaders also agreed to a further $1.2 billion package of Strengthening Medicare measures to take pressure off hospitals.

AAP contributed to this report.