The National Disability Insurance Agency’s (NDIA) spending on private law firms to battle participants appealing its decisions rose 30% last financial year, new figures show.
Data released under freedom of information laws shows the agency paid about $17.3m in 2020-21 to firms representing the agency in “external matters” such as legal challenges at the Administrative Appeals Tribunal.
The figure is an increase from $13.4m the previous financial year, the data shows.
It underlines how the rapidly increasing number of national disability insurance scheme (NDIS) participants challenging decisions to cut or deny them support can create a windfall for law firms paid by the taxpayer.
While spending on fees to law firms has increased, community law centres funded to represent people with disability have told Guardian Australia they are at capacity and struggling to take on new clients.
It means NDIS participants challenging cuts to their plans are left without representation while being pitted against lawyers from top firms.
The new figures come a day after the Morrison government pointed to a $26bn increase in costs for the NDIS over the next four years, according to the mid-year economic outlook.
Disability advocates and Labor have questioned the legitimacy of the forecast, which is one of several cost blowout predictions to have emerged from the government in recent months.
It also follows increased controversy over the scheme amid growing reports of deep cuts to individual packages, while Guardian Australia revealed this month that NDIS appeals to the AAT have tripled since July.
The freedom of information documents outlining the agency’s legal spending were released to Christopher Coombes of the consulting group Team DSC.
Coombes said advocates and legal representatives in all states and territories were seeing NDIS participants with cuts to their funding packages.
“The hardest hit areas include cutbacks to people with very high support needs who do not wish to live in group homes, cutbacks where people require one support worker with them all the time, and cutbacks to intensive therapies for children,” Coombs said.
“Disabled people who have not been successful in pursuing an external review, or don’t have the resources or emotional energy to appeal a decision, are losing supports.
“This can have wide reaching consequences, including the risk of the loss of function, serious harm, or death.”
The agency refused to name the private law firms in question or outline how much they were each paid, but it has previously indicated firms such as MinterEllison, Sparke Helmore, Clayton Utz and Ashurst are among the eight that are involved.
The NDIA told Coombes releasing the funds paid to each firm would give away “trade secrets or commercially valuable information”.
NDIS participants who want to challenge a cut to their plan must first lodge an internal review with the agency.
If this is unsuccessful, they can appeal to the AAT, meaning the entire process can take well over six months.
The AAT has previously said only about one-fifth of NDIS participants have legal representation, while Guardian Australia has previously reported the NDIA outsources about one third of all cases to private firms.
The NDIA also has an in-house legal team of 13 lawyers for for AAT cases, the FOI documents show.
The agency told Guardian Australia its total legal spend – including external firms and in-house lawyers and other costs – in 2020-21 was $29.3m.
An NDIA spokesperson said “specific specialist expertise from law firms may at times be required” because the NDIS was a “a large scale reform”.
“The decision whether to outsource an AAT matter is made having regard to the complexity of a matter, area of specialisation of the relevant law firm and where capacity may required,” the spokesperson said.
Asked this week if he could rule out future cuts to the NDIS, the treasurer, Josh Frydenberg, said the government was “committed to fully funding that program”.