Ahead of delivering his first budget this month,Treasurer Jim Chalmers highlighted health,aged care,defence and the NDIS as areas where budget pressures are “intensifying rather than easing”.
But the NDIS is a particular problem for the government,being the second-most expensive federally funded program,after the age pension,but is also rising in cost much faster than other programs. The conundrum facing the treasurer with this budget is what he can do about it,given government debt and deficit continue to rise.
Last week Chalmers pointed out spending on defence,aged care and hospitals will rise by 4.4 per cent,5 per cent and 6.1 per cent each year over the next four years respectively. By contrast,spending on the NDIS will grow by 12.1 per cent a year over the same period.
Anindependent review by analytic firm Taylor Fry found NDIS participants were spending only 80 per cent of their approved plan on average,meaning there was room for the scheme to increase 20 per cent in price even without new entrants.
The report also noted just 37 per cent of people on the disability support pension were on the scheme – an indicator that there are many years of growth left.
At a very basic level,the cost of the scheme comes down to the number of people in it,multiplied by the average cost per person. And both of those are higher than was initially anticipated when the scheme was launched.
The Deloitte Access Economics partner Stephen Smith said the NDIS was meant to cost about 1 per cent of GDP,but was now looking like costing about 3 per cent.