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The NDIS and the national budget

Recently, a very big national newspaper wrote stories about how Australia doesn't have enough money to pay for the NDIS. This sounds very frightening but it isn’t true. Read our article for all the facts. 

It is frustrating when newspapers make things bigger than they are to get people’s attention and sell more papers. But it is also very important to talk about the money, because people feel very strongly about it because the money comes from the taxes we pay.

 

All governments agree on the NDIS

It is very hard to find topics that Prime Ministers Rudd, Gillard, Abbott and Turnbull all agree on. But a very important one is the National Disability Insurance Scheme.

Why did all of the last four Prime Ministers and their Governments agree that it is needed? There are two reasons:

  1. It levels the playing field for people with disability by providing the supports they need to have the same opportunities as everyone else in the community. It is the right thing to do.
  2. It will save money in the long term. Governments tend to have a very short term focus on minimizing costs in a particular budget year. The NDIS will focus on long term saving. It is the best use of taxpayers’ money.

 

How is it the best use of taxpayers’ money?

Australia spends billions of dollars on disability supports right now. The Productivity Commission did the complicated research and calculations to show that the way disability supports are funded now will mean the current doubling up and poor practice will mean they will become too expensive for the budget in future years.

The Productivity Commission worked out (and all sides of Government agree) that it will be much better in the long term if we invest in people with disability now, so that:

  • More people with disability will be able to work  - which means they will pay tax instead of needing the Disability Support Pension
  • People with disability will be healthier – so will need less money from the health system
  • People with disability will be more independent – so will need less special (expensive) support and allow more carers to go back to work.
  • People with disability will not be in crisis – which always costs more money than helping people along the way
  • More jobs will be created

If all these things happen, then the cost of disability supports will slowly decrease, rather than continue to increase. That is the important point missing from the newspaper articles.

 

The insurance model

The ‘I’ in NDIS stands for insurance. We often overlook this important point when we talk about all the improvements that the Scheme is bringing for people with disability.

The NDIS uses an approach called ‘social insurance’. This means that, because any one of us might be affected by disability at any time, the costs of disability supports and services are shared across the community (like increasing the Medicare levy).

The NDIS is based on ‘insurance principles’. This means that it focuses on lifetime value, not the short term. It invests in research and innovation and it changes the way the community thinks about disability.

Just as the Transport Accident Commission in Victoria has decreased the road toll and changed community attitudes to drink driving and wearing seatbelts, the NDIS intends to reduce the impact of disability on people’s lives by helping early as well as changing attitudes to employing and including people with disability in regular community activities. This will benefit both individuals and the nation and, according to the Productivity Commission, is expected to add around 1% to the Australian economy.

 

The numbers do add up

The newspapers keep talking about the $22.8 billion per year that the Productivity Commission said the NDIS will cost when it is fully rolled out.

This amount includes the money that the federal, state and territory governments already contribute to disability supports. Only a small proportion is ‘new’ money above the billions that is already being spent now.

And the extra amount is the investment needed now that will lead to tens of thousands of people with disability in work, plus tens of thousands of carers.

Once this starts to happen, the extra tax paid by these new workers plus the decrease in Disability Support Pension payments are projected to add about $22 billion to the Australian economy.

It’s called a win-win situation when the right thing to do for people is also the right thing to do for the economy. So let’s celebrate the investment we are making now.

 

Here are some links to media that have talked about these issues:

NDIS: Malcolm Turnbull's new multibillion-dollar budget brawl
Australian Financial Review, February 28

NDIS: Makes Economic Sense
Every Australian Counts, Februrary 15

The NDIS is rock solid
Every Australian Counts, Februrary 12

State Lib hits out at ‘toxic’ sniping over NDIS’s ‘failure’
The Australian, February 12

NDIS cost blowouts 'misleading'
9news.com.au, February 11

Talking cents about the NDIS
​
Every Australian Counts, February 4

Media Release: NDIS Funding
JFA Purple Orange, February 1

What’s the Budget fuss?
Every Australian Counts, January 29

When you’re in a budget hole, stop digging
The Australian, January 29

Grand promises prove Bill Shorten has a lot to learn
The Australian, January 29

Labor rejects NDIS funding shortfall
9news.com.au, January 28

NDIS faces funding challenges with government’s $5 billion shortfall
The Advertiser, January 28

Wayne Swan defends NDIS funding setup amid $5bn budget hit
The Australian, January 28

$5bn budget hit as NDIS fund dwindles
The Australian, January 28

NDIS fully financed until 2019-20
The University of Sydney, December 03, 2015